Naim Holdings Bhd will develop the 12 ha site of the old Bintulu airport into an integrated upmarket commercial and residential project with gross development value (GDV) of RM2bil

Naim Holdings Bhd will develop the site of the old Bintulu airport into an integrated upmarket commercial and residential project.

The new city centre for the booming industrial town will comprise condominiums, street mall, international class hotel, shopping complex and other related facilities.

Corporate services senior director Ricky Kho said the project on about 12ha would have a gross development value (GDV) of RM2bil.

“It will be implemented in two phases, with phase one targeted for launch by year-end,” he told StarBiz.

An artist’s impression of Naim’s Batu Lintang mixed development project with gross development value of RM2bil.

Kho said the proposed street mall would feature commercial shophouses and small home offices while the three-star hotel would have about 200 rooms.

The condominium blocks would house some 600 units for sale to both local and foreign buyers.

“Phase one development is expected to take five years. Phase two will involve construction of the shopping complex,” he added.

Naim, Sarawak's biggest property developer, is expected to own and operate the shopping complex as a long-term investment.

Kho said there was a strong demand for quality accommodation like hotel, condominium and serviced apartment in Bintulu with the big influx of expatriates involved in the development of energy-intensive industries in Samalaju Industrial Park.

Samalaju is one of the five growth nodes of Sarawak Corridor of Renewable Energy (SCORE) and it will become the state's new heavy-industry centre.

Bintulu is now undergoing its third industrial boom. Besides the setting up of heavy industries like aluminium and manganese ferrosilicon smelters, the city also has two other major projects the Samalaju deepsea port and Petroliam Nasional Bhd's Bintulu liquified natural gas Train 9.

Naim will make its Bintulu integrated mixed development a major retail centre, leveraging on the growth of SCORE.

Meanwhile, Kho said Naim was expected to commence construction work of its proposed RM1.5bil mixed development in Batu Lintang here in the next few months as planning approval had been obtained.

The joint-venture project will involve the development of a 27-storey apartment, 18-storey condominium, 36-storey office tower, shopping mall, 17,000-sq-ft showroom, multi-storey car parks and water theme park. The prime land, which was previously occupied by government quarters, has been cleared.

He said phase one would involve some apartment and condominium units.

Naim's joint-venture partners in the project are charitable trusts, Lembaga Amanah Kebajikan Masjid Negeri Sarawak and Tabung Baitulmal Sarawak.

Kho said Naim had chalked up strong sales of properties this year, boosted by the high take-up rates of newly launched schemes in existing townships in Miri and Kota Samarahan.

“We have registered sales of about RM125mil as at May 31,” he added. Last year's sales was RM184mil an increase of RM42mil over 2010.

He said the top-selling properties were single-storey semi-detached and terraced houses in Miri's Permyjaya township (Naim's flagship development) and terraced units in Desa Ilmu in Kota Samarahan.

Naim is also recording good sales for its walk-up apartments launched recently in up-market Riveria satellite township near here.

The company has set up an office in Kota Kinabalu to prepare for its property development expansion in Sabah.

Naim, which has a land bank of about 1,050ha in Kuching, Miri and Bintulu, is on the lookout to acquire more land.

Source: www.thestar.com.my

Spain secured a European lifeline of up to 100 billion euros ($125 billion) on Saturday to save its stricken banks and try to avert a broader financial catastrophe

Spain secured a European lifeline of up to 100 billion euros ($125 billion) on Saturday to save its stricken banks and try to avert a broader financial catastrophe.

After an emergency video conference lasting more than two hours, eurozone finance ministers issued a statement saying they were "willing to respond favourably" to a Spanish plea for help.

The deal -- hailed by European economic powerhouse Germany and the United States as well as the IMF -- was a dramatic climbdown for Spain, where successive governments have hotly denied any need for outside aid.

Prime Minister Mariano Rajoy's conservative government finally bowed to pressure from world leaders and, more importantly, the markets, which have sent Spanish borrowing costs soaring.

Defying all efforts by policymakers, the eurozone emergency has now spread to the region's fourth-biggest economy -- Spain's is twice the size of those of Greece, Ireland and Portugal combined.

"The Spanish government declares its intention to solicit European financial help for the recapitalisation of those banks that need it," a visibly tense Economy Minister Luis de Guindos told a news conference.

De Guindos refused to describe the aid as a rescue, which his government had categorically ruled out right up to the last moment.

"This has nothing to do with a rescue," he insisted, arguing that the aid would be directed to the 30 percent of banks with the greatest exposure to the 2008 property market crash.

The deal imposed no conditions on the overall Spanish economy, and no new austerity measures, de Guindos said.

"The only conditions are for the banks," said the finance minister.

"There are no additional conditions for the Spanish people," he said, conceding however that the expense will further boost Spain's mushrooming public debt.

Spain, which will become the fourth eurozone state to receive financial help since the sovereign debt crisis erupted two years ago, finally sought aid as the cost of buttressing the banks spiralled in past weeks.

Recently nationalised Bankia, which has the largest exposure to the real estate sector, has asked for a mammoth 23.5 billion euros to repair its books, of which 19 billion euros have yet to be found.

Under Saturday's deal, up to 100 billion euros would be provided by the European rescue mechanisms to recapitalise Spanish banks, the eurozone ministers said, providing an "effective backstop" for all possible requirements.

"So we have a new concept. A 'lite' bailout with no material conditions on the sovereign and instead merely the banks that apply," Lloyds Banking Group economist Charles Diebel said in a report.

"This is the latest in the long list of euro measures to stem the crisis. Will it be enough? That's questionable as it is still prevention rather than cure and again only keeps the banking sector alive rather than really supporting growth."

The scale of the aid depends on an external audit being carried out for Madrid by consultants Roland Berger and Oliver Wyman. The audit is due by June 21 but de Guindos said it would ready within a few days.

De Guindos stressed that the 100 billion euros included a big safety margin.

"This announcement is good news for the Spanish economy and for the future of the eurozone," he said.

The assistance is to be channelled through Spain's state-backed bank Fund for Orderly Bank Restructuring, eurozone policymakers said.

Ministers said they were confident Spain would honour commitments to cut the deficit and restructure the economy. "Progress in these areas will be closely and regularly reviewed," they said in the statement.

International Monetary Fund bank stress tests, unveiled Friday three days ahead of schedule, determined that Spanish banks need about 40 billion euros ($50 billion) in new capital.

But an IMF official noted that the banks would probably need more than that to build a "credible firewall".

Policymakers hope the rescue will satisfy financial markets and put Spain in a safe harbour ahead of the Greek elections on June 17, which risk leading to a destabilising exit from the eurozone.

German Finance Minister Wolfgang Schaeuble hailed the deal for Spain saying he and his colleagues welcomed Madrid's "determination" to recapitalise the banks with "rescue funds".

In Washington, IMF managing director Christine Lagarde said she welcomed the Eurogroup decision to provide a "credible backstop" to the Spanish banking system.

US Treasury Secretary Timothy Geithner also welcomed the moves, saying: "These are important for the health of Spain's economy and as concrete steps on the path to financial union, which is vital to the resilience of the euro area." – AFP

Source: www.thesundaily.my

Felda Global Ventures Holdings Bhd (FGV) is looking at spending another C$30 million (RM92.8 million) to C$40 million (RM123.7 million) to upgrade the port facilities for its canola business in Canada

Felda Global Ventures Holdings Bhd (FGV), en route to a listing on Bursa Malaysia this month, is set to expand Malaysia's investment footprint in Canada this year via increased investments in the canola business.

Canadian High Commisioner to Malaysia Randolph Mank said FGV's Canada-based unit - Twin Rivers Technologies-Enterprises de Transformation Graines Oleagineuses du Qubec (TRT-ETGO) is looking at spending another C$30 million (RM92.8 million) to C$40 million (RM123.7 million).

Twin Rivers had initially invested C$250 million in the business.

"The expansion of the company's operations is meant to upgrade the port facilities so they can get products out of the port faster to its (export) markets," he told Business Times during a recent visit to Penang.

FGV has a RM760 million canola processing facility in Becantour, Quebec.

Twin Rivers is a canola seed and soyabean crushing plant with palm oil blending capabilities for both types of oil.

Mank said the Canadian government is both pleased and welcoming of this reinvestment by FGV, which reflects a maturing Malaysian economy, where local firms are now looking outward and investing in countries like Canada.

Mank said that a Canadian aircraft maker is currently in talks with a state government over the sale of two of its "Twin Otter" planes.

He did not divulge the name of the plane maker nor the government authority in question, except to say that the prospective buyer is looking at boosting its current fleet of aircraft with new-generation planes.

A check on the web revealed that the Canadian-made 19-seater DHC Twin Otter planes are currently used in Malaysia by MASWings, a subsidiary of Malaysia Airlines, and Sabah Air.

Mank also said that Bell Helicopters is looking to make a comeback into Malaysia and that Canada is keen for bilateral ties with Malaysia, to intensify investments in sectors such as oil and gas, energy, aviation and agriculture.

"We would like to see access for Canadian beef and pork into Malaysia, and an increased presence of some 1,500 Malaysia students in Canada," he noted.

"The annual Canadian Education Fair which is traditionally held in cities like Kuala Lumpur and Kota Kinabalu, will be extended to Penang early next year," Mank added.

Source: www.btimes.com.my

K&N Kenanga Holdings Bhd and ECM Libra Financial Group Bhd have received Ministry of Finance's approval for their proposed merger

K&N Kenanga Holdings Bhd and ECM Libra Financial Group Bhd have received the Finance Minister's nod for their proposed merger.

Both investment banks told Bursa Malaysia in separate announcements that they had received the notification from Bank Negara.

The terms and conditions of the deal would be revealed when the definitive agreements were signed, they said.

StarBiz had reported in February that K&N Kenanga was close to an agreement to buy the investment banking and broking unit of ECM Libra for about RM900mil.

It has been reported that ECM Libra's major shareholders, including Tan Sri Azman Hashim with a 23.85% stake, have been looking to sell their shares at the right price.

Azman, who is also chairman of AMMB Holdings Bhd, emerged as ECM Libra's single-largest shareholder in 2007 after acquiring 128 million shares for RM102mil.

The acquisition increased his stake in the investment bank to about 22% then.

The sale will enable Azman to meet licensing rules that bar a single individual from being a key owner of more than one investment bank.

Concurrently, ECM Libra co-founders Lim Kian Onn and Datuk Seri Kalimullah Masheerul Hassan, who own 9.48% and 3.97% respectively, are also said to be open to selling their stakes.

Lim is currently ECM Libra's group director while Kalimullah is chairman.

ECM Libra, which has a market capitalisation of about RM669mil, is the country's 10th biggest broker by trading volume year-to-date, according to Bursa website.

K&N Kenanga is the seventh largest equities broker by trading volume so far this year.

ECM Libra finished 2.5 sen higher to 82 sen while Kenanga gained 0.5 sen to 62.5 sen.

Source: www.thestar.com.my

Property prices in Penang is expected to rise given the rise in raw material prices and scarcity of land- Raine & Horne Malaysia director Michael Geh

The scarcity of land on Penang island and its lure as a tourist destination and a second home for foreign retirees have caused residential property prices to soar by more than 25% over the past five years.

According to real estate valuers, the prices are among the highest in Malaysia, which is why the Consumers Association of Penang claimed that only the rich could live on the island a world heritage city.

A survey by The Star revealed that condominium units in Batu Ferringhi, Tanjung Bungah and Gurney Drive which front the sea are being sold at astronomical prices, in some cases beginning with RM2mil for a 1,000 sq ft unit.

Even pre-war houses in the inner city for example, in Campbell Street have been snapped up mostly by non-Penangites, who have turned them into boutique hotels or simply kept them because of their architectural beauty.

The prices of the houses have rocketed from about RM500,000 in 2007 to approximately RM800,000 today an increase of about 30%.

Raine & Horne Malaysia director Michael Geh said the increase was among the steepest in the Pulau Tikus, Gurney Drive, Tanjung Tokong, and Tanjung Bungah residential neighbourhoods, which experienced a rise of over 25% in prices of condominium units.

Other areas where prices of condominium units and terrace and semi-detached houses have shot up by at least 25% are Bayan Baru, Sungai Ara, Minden Heights and Batu Maung.

The medium-range housing schemes in George Town neighbourhoods of Perak Road, MacCallum Street, Burmah Road, Jelutong Road and Sungai Pinang have not been spared.

“These have seen over a 25% increase in prices over the past five years,” Geh said.

An apartment located in such a neighbourhood cost RM180,000 in 2007 but is now RM250,000,Geh said the rise in property prices had driven many people to buy homes in Seberang Prai, where property prices are a third of those on the island.

“But we are seeing property prices on the mainland rising as well,” he added.

An apartment in Butterworth town is now selling for RM250,000, compared to RM180,000 five years ago, while a terrace house now costs RM500,000, compared to RM300,000 in 2007.

Given the rise of raw materials prices and the scarcity of land, property prices in Penang were expected to continue rising, Geh added.

Meanwhile, Penang Barisan Nasional chairman Teng Chang Yeow said there were only one or two major hillslope projects during the previous administration. Now, there were hillslope projects all over the island.

He said the present guidelines on hillslope development were adequate, but the state government should be more stringent in enforcing them.

Source: www.starproperty.my

Cahya Mata Sarawak Bhd (CMSB) signs MOU with Malaysian Phosphate Additives Sdn Bhd to set up a joint venture RM 850 million integrated phosphate plant in Samalaju, Sarawak, production capacity of 500,000 tonnes

Cahya Mata Sarawak Bhd (CMSB), through wholly owned subsidiary Samalaju Industries Sdn Bhd, has entered into a memorandum of understanding (MoU) with the aim of setting up a joint-venture (JV) integrated phosphate plant in Samalaju, Sarawak.

CMSB told Bursa Malaysia yesterday that the MoU with Malaysian Phosphate Additives Sdn Bhd, which makes various grades of food and feed phosphates, was for the purpose of entering into negotiations pertaining to the plant with an annual production capacity of about 500,000 tonnes at a current estimated cost of RM850mil.

Subject to the terms of the JV agreement to be mutually agreed, Samalaju Industries and Malaysian Phosphate may set up a special-purpose vehicle to undertake the project.

The indicative equity structure of the project company is 60% held by Malaysian Phosphate and 40% by Samalaju Industries.

CMSB said the project company would undertake a feasibility study before proceeding with the project. It will also enter into, among other things, a power purchase agreement and raw material supply agreement.

Should Samalaju and Malaysian Phosphate failed to enter into a definitive agreement by Dec 31 or at another extended date agreed by both companies, then the MOU might be terminated by either party in writing, it added.

During the term of the MOU, each of the parties will not permit any of its representatives, to, accept or entertain offers, negotiate, solicit interest or otherwise enter into or continue any existing discussions with any party in connection with any phosphate plant and its related businesses in Sarawak.

Samalaju Industries, which is principally an investment holding company, has an issued and paid-up share capital is RM22mil comprising of RM1 shares each.

Meanwhile, the issued and paid-up share capital of Malaysian Phosphate is RM8.99mil comprising of RM1 shares each and 45,615 preference shares of RM1 each.

The MOU will not have any material effect on the earnings or net assets of CMSB for the year ending Dec 31.

Source: www.thestar.com.my

China's central bank cut benchmark interest rates by 25 basis points to shore up slackening economic growth, its first rate cut since the depths of the 2008/09 financial crisis

China's central bank cut benchmark interest rates by 25 basis points on Thursday in a surprise move to shore up slackening economic growth, its first rate cut since the depths of the 2008/09 financial crisis.

The new rate of 6.31 percent is effective from June 8, the People's Bank of China (PBOC) said in a brief statement on its website. The PBOC also cut deposit rates by 25 basis points to 3.25 percent.

The consensus view of economists had been that the PBOC would refrain from an outright cut to interest rates in 2012 and instead cut the required reserve ratio (RRR) of the country's banks to boost credit creation and deliver money supply growth in line with the 14 percent official target.

"This is very positive for risk appetite and is indicative PBOC are there to support the Chinese economy. If anything I am surprised the moves so far look quite muted," said Michael Sneyd, a currency strategist at BNP Paribas.

"We would expect to see more investors put on risk positions," he said.

The PBOC has cut RRR for the biggest banks by 150 basis points from a record high of 21.5 percent in three moves since November last year, after a two-year tightening campaign to rein in inflation and cool steaming economic growth.

The last change to the borrowing rate was in July 2011 when the 1-year benchmark lending rate was raised by 25 bps to 6.56 percent.

However, China is now on track to deliver its weakest quarter of growth in three years in the second quarter.

The market consensus in a benchmark Reuters poll last month was for annual growth to drop to 7.9 percent, which would mark the sixth straight quarter of softening.

They expected growth for 2012 to slide to 8.2 percent, the smallest expansion in the emerging market giant since 1999 but still above a government target of 7.5 percent. - Reuters

Source: www.thestar.com.my

Analysts' views on Berjaya Sports Toto (BJTOTO)'s proposal to spin off the number forecasting operations

There was mixed response from the investing community on Berjaya Sports Toto Bhd's (BToto) proposal to spin off the number forecasting operations (NFO) of Sports Toto Malaysia Sdn Bhd (STM) as a RM6bil business trust in Singapore.

While shareholders may receive a special dividend of about 50 sen from this exercise over the short term, some fund managers feel that investors have to evaluate the longer term prospects as dividends could be less due to the dilution of BToto's stake in the new business trust.

A few fund managers contacted said the main reason they invested in BToto was because of STM's business. which is also the main contributor for BToto earnings.

Now that STM will be listed as a new business trust, Sports Toto Malaysia Trust (STM Trust), BToto's stake will be diluted to 79.5% from 100% previously. Thus, future dividends may be proportionately less.

OSK analyst Keith Wee said while earnings might be diluted post exercise, its capacity to increase dividends could be enhanced.

“We note that the entire corporate proposal is expected to unlock RM1.1bil in cash proceeds for BToto, thus providing ample scope for the group to raise its return on equity via a more pro-active capital management exercise that would entail a combination of special dividends and near-100% dividend payout.

Furthermore, the listed STM Trust is committing to a 100% dividend distribution policy on a quarterly basis.

“This implies a dividend yield of 6% at the proposed issue price of S$0.50,” said Wee.

BToto executive director Freddie Pang said the earnings dilution would be to the extent of the diluted holdings of 79.5%. This dilution will be compensated by an expected special dividend of between 45 sen and 50 sen and an expected higher dividend from STM to the trust as STM's future cash flows will not be adversely impacted by the need to service the RM550mil medium term notes (MTNs).

“STM will receive about RM527.4mil from the initial public offering which will be earmarked for the MTNs repayments. We have also stated that as and when legally possible, we would like to distribute a bulk or all of the units to shareholders. So shareholders who have invested in BToto mainly for exposure to STM will now have direct interest in STM. They can also take the special dividends and buy more of the units when they are listed,” said Pang.

CIMB analyst Loke Wei Wern is overall neutral on the deal. She, however, advises investors to stay invested in BToto. “Even after the proposed divestment, BToto's net yields should hover around 4.5%-5%, which is still appealing in volatile times like these. Our ballpark calculation suggests that the estimated 45 sen special dividend would be sufficient to compensate for nine years of net dividend per share (DPS) loss due to the 20% reduction in shareholdings,” said Loke.

The estimated 45 sen special dividend translates to yields of 11% based on the current share price.

Kenanga Research analyst Teh Kian Yeong feels there may be a de-rating of the stock, as there will now be a breaking up of the NFO business.

He said BToto was doing the opposite of what Multi-Purpose Holdings Bhd (MPHB) recently proposed. MPHB is proposing a demerger and listing of its non-gaming businesses in order to turn the company into a pure gaming outfit

Meanwhile, STM Trust will be listed on the main board of the Singapore Exchange Securities Trading Ltd by mid-November this year where it will raise approximately RM1.24bil.

Under the proposal, the RM6bil consideration will be satisfied via the issuance of 4.43 billion units of STM-Trust to BToto's indirect unit Berjaya Sports Toto (Cayman) Ltd for a total value of S$2.21bil (RM5.47bil) at an issue price of S$0.50. The balance of S$213.4mil (RM527.4mil) will be satisfied by way of a promissory note or bill of exchange to BToto.

BToto Cayman will have an offer for sale of 540 million units of its 4.43 billion units in STM Trust.

At an indicative issue price of RM1.24 (S$0.50), this will raise gross proceeds of RM670mil, translating into 50 sen as a special dividend.

“We think the reduction in annual net DPS could be less given that BToto will be the trustee manager for STM Trust in exchange for a management fee of about RM20mil per annum,” said Loke.

The company may consider distributing a substantial portion or all of the remaining 3.89 billion STM Trust units held by BToto Cayman to BToto shareholders.

RHB analyst Hoe Lee Leng has upgraded BToto to a “trading buy” on the back of the 50 sen dividend and the potential distribution of all or a substantial portion of BToto's remaining units in STM Trust.

Pang added that with this deal, BToto would still be in the NFO business as it had Berjaya Philippines Inc which manages the Philippines Lotto, International Lottery & Totalizator Systems, Inc (US) which manufactures and distributes computerised lottery and voting systems, a 25% strategic stake in the STM Trust (should the board decide to retain this stake and not distribute all the units) and STM Management Pte Ltd, the proposed trustee-manager for the STM Trust.

“In all, the earnings of BToto will still be quite substantial. As a rough guide, Berjaya Philippines' net profit averages RM60mil. while the trustee-manager's fee will be about RM20mil per annum. If a 25% stake in the STM Trust is retained, there will be earnings contribution from that as well,” he said.

Source: www.thestar.com.my

Global natural rubber output is seen at 10.475 million tonnes in 2012 as compared to last year's 10.325 million tonnes- Association of Natural Rubber Producing Countries (ANRPC)

Global natural rubber output is seen at 10.475 million tonnes in 2012, nearly 2 percent above an April estimate of 10.297 million tonnes, on higher first-quarter Thai production, the Association of Natural Rubber Producing Countries said on Wednesday.

While total consumption by members of the ANRPC was likely to rise this year, the debt crisis in Europe and its possible impact on Asia cast a shadow over the demand prospect for natural rubber, the group said in a statement.

"The crisis in the euro-zone and worrisome economic trends world over seem to have damaged the demand prospects for natural rubber," said the group.

"(The) global economy has become much more fragile with a further deepening of debt crisis in the euro zone. Its impact on Asian economies has been in multiple ways such as weak trade, volatile markets and a cautious investment climate."

Consumption of member countries was estimated at 6.477 million tonnes in 2012, higher than 6.266 million tonnes last year but the growth rate was revised down to 3.4 percent from 4.5 percent anticipated in April.

"Given a sluggish economic outlook, the import-demand is likely to slow down during the third and the fourth quarters, especially from China, unless the country launches a new round of major investments," said the group, referring to the world's top consumer.

ANRPC's member countries, which include Thailand, Indonesia, Malaysia, Vietnam and India, currently account for about 57 percent of the global consumption of natural rubber and more than 90 percent of global output and exports.

Total production was estimated to rise around 1.5 percent to 10.475 million tonnes compared to last year's 10.325 million tonnes.

"The upward revision for this year is mainly contributed by Thailand. The country is reported to have produced 896,000 tons in the first quarter, far exceeding the preliminarily-estimated 739,000 tons," said the report, referring to the top producer.

"It is now anticipated that Thailand's production during this year would touch 3.625 million tonnes, up 1.6 percent from the previous year, as against a 1.1 percent annual fall to 3.531 million tonnes expected a month ago."

Tokyo rubber futures, which set the tone for physical prices, sank to their weakest in more than two years as Europe's debt woes heightened worries about the global economy and the outlook for demand.

The market has ignored a plan by Thailand to seek concerted action with fellow producers Indonesia and Malaysia to stabilise falling rubber prices. - Reuters

Source: www.thestar.com.my

Berjaya Sports Toto (BJTOTO) to list its wholly owned subsidiary Sports Toto Malaysia Sdn Bhd as a business trust on the Singapore Stock Exchange

(BJTOTO opening stock price today (6.6.2012) was RM 4.25)

Berjaya Sports Toto Bhd (BST) is proposing to spin off its cash generating subsidiary, Sports Toto Malaysia Sdn Bhd (STM), into a business trust or STM-Trust to be constituted in Singapore and have it listed on the Singapore Stock Exchange (SGX).

Under the scheme, BST would divest STM to STM-Trust for RM6bil to be satisfied by an issue of 4.43 billion trust units issued at S$0.50 each or RM1.24 and about RM527.4mil would be settled via the issuance by STM-Trust of a promissory note or bill of exchange in favour of BST.

The corporate exercise would also see STM-Trust issuing up to 460 million new units in conjunction with the initial public offer (IPO) and the pricing would be determined via book building.

BST will also make an offer for sale of up to 540 million trust units at a price to be determined via the same book building process.

In all, a total of one billion STM-Trust units would be made available to institutional, corporate and retail investors in conjunction with the IPO exercise which would represent about 20.46% of the total enlarged outstanding units of 4.89 billion.

BST expected that this proposal would further unlock shareholder value in STM by accessing a potentially larger pool of investors of non-syariah compliant stocks as well as by adopting a corporate structure that facilitates more effective capital management.

The STM-Trust would be mandated to only invest in gaming type businesses and investments. It would also adopt a policy to distribute 100% of its surplus operating cash flow annually.

Following the successful completion of the scheme, BST would have a 79.54% interest in STM-Trust which would own 100% of STM.

Accordingly, STM-Trust would be managed by a trustee-manager, a wholly-owned subsidiary of BST under the proposed name, Sports Toto Malaysia Management Pte Ltd.

STM-Trust is expected to debut on the SGX by year-end.

By way of illustration, the proposed offer for sale could raise gross proceeds of up to RM667.4mil and the proposed public issue potentially raise gross proceeds of up to RM568.5mill based on an assumed offer price of S$0.50 per STM-Trust unit.

BST CEO Datuk Robin Tan Yeong Ching said the scheme was another example of the board's initiative to further unlock value for shareholders.

“The board is of the opinion that shareholders will benefit in terms of better valuation in the long term.

“The STM-Trust will be focused purely on gaming activities where it can leverage on its core expertise and experience.

This singular objective should enhance transparency for investment managers and research analysts to track the performance of the business” he said in a statement yesterday.

He added that shareholders could also expect to receive special cash dividends from net proceeds to be raised from the offer for sale in conjunction with the IPO.

“The board may consider distributing the majority or all of the units to shareholders of BST as and when it is able to do so legally so that shareholders can benefit directly from the distributions and growth of STM-Trust” he said.

Tan expected that STM-Trust's market capitalisation could be quite substantial and hoped that it would be one of the larger business trusts on the SGX with more than 20% (the minimum spread is 12%) of the units (one billion units) in the hands of the public.

“We hope that STM-Trust will be well received on the SGX given its attractive fundamentals, size and liquidity spread” Tan pointed out.

BST explained that a business trust, a relatively new investment vehicle is akin to a REIT (a trust for real estates) where its caters for other types of businesses such as shipping, ports, telecommunications amongst others.

Upon completion of the proposals, the earnings contribution from STM to BST will reduce by approximately 20.46%.

Source: www.thestar.com.my