Thursday, June 9, 2011

Benalec ... Jun11

The group has entered into an agreement with Vista Selesa Development Sdn Bhd for the proposed disposal of land in Klebang, Melaka.

The land measures 2,977,736 sq ft, with a 99-year leasehold period. It is strategically located within seven km west of Bandar Melaka and 15km southwest of Ayer Keroh town. In the future, it will also have direct access from the proposed Coastal Highway which links Duyong, Mahkota Parade, Kota Laksamana and Klebang.

Benalec will receive a total cash consideration of RM46 million for the first portion of the land measuring 1,627,405 sq ft (about 15ha). For the remaining portion, Benalec has entered into a joint venture with Vista Selesa to develop 1,350,331 sq ft (12.5ha) of land into a mixed development project. Under the deal, Benalec would either receive a cash consideration of RM38 million or 25% of the project’s estimated gross development value, whichever is higher, when it is completed in 2013.

Benalec also announced that it has proposed to undertake a private placement and a share buyback exercise of up to 10% each of its share capital.

Taken together with Benalec’s net entitlement to the land sale on the first portion and estimated proceeds from any proposed private placement, estimate that Benalec could potentially raise proceeds of about RM144 million.

The latest move is part of Benalec’s strategic positioning to raise capital ahead of more value-accretive deals in the future. It intends to use part of any new monies raised to fund its upcoming Kota Laksamana project in Melaka.

The 101ha Kota Laksamana land holds immediate development potential as it sits on prime seafront land within the Melaka city centre. Benalec is in the process of obtaining approvals from the authorities and the project could kick off by 4Q2011. The group is also open to forging strategic partnerships with reputable developers to realise the deeply-embedded value of the land.

Based on land sales alone, estimate that Benalec could reap a net gain of RM80 million or about RM27 million per year over a three-year period based on a conservative value of RM28 psf.

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