PETALING JAYA – Tan Sri Lim Kang Hoo has proposed a restructuring exercise for his listed companies by recommending that his construction and highway outfit Ekovest Bhd launch a takeover of his property company Iskandar Waterfront City Bhd (IWC) at RM1.50 per share of the latter.

It has also been announced that Lim’s earlier plan of injecting his unlisted master developer company, Iskandar Waterfront Holdings Sdn Bhd (IWH), into IWC is being called off.

The new proposal will turn Ekovest – a construction player which is also a highway operator – into a major property player, considering the vast landbank it will own if it buys IWC.

This effectively caps IWC’s share price at the RM1.50 level, a far cry from the RM3.22 achieved on May 2, on the back of IWH becoming the master developer of the billion-ringgit Bandar Malaysia project.

In December 2015, IWH-CREC Sdn Bhd, a consortium comprising IWH and China Railway Engineering Corp (M) Sdn Bhd, executed a share sale and purchase agreement with 1Malaysia Development Bhd to acquire a 60% equity interest in Bandar Malaysia Sdn Bhd to jointly develop the project for RM7.4bil.

All was fine and dandy until May 3, when the Ministry of Finance Inc (MoF) terminated its agreement with the IWH-CREC consortium to be the master developer of Bandar Malaysia.

In a statement issued then, TRX City Sdn Bhd, an entity of the MoF, said that the consortium had failed to meet payment obligations outlined in the sale agreement for its planned purchase of 60% equity in Bandar Malaysia.

Meanwhile, Ekovest received a letter from its major shareholder Lim on Oct 27, proposing that the company undertake a conditional voluntary takeover of 62% of IWC.

IWC shares were last traded at RM1.40, while that of Ekovest were last traded at RM1.16. The counters will resume trading today.

In a filing with Bursa Malaysia, Ekovest said that the proposed acquisition would involve it undertaking a conditional voluntary takeover offer to acquire all IWC shares for a cash consideration of RM1.50 per offer share.

The second option is for new ordinary shares to be issued by Ekovest on the basis of one new Ekovest share at RM1.50 per share for every one offer share.

“Subject to approval from the board, Lim will propose to IWH, which is currently holding 38% of the issued and paid-up share capital of IWC, not to accept the offer made by Ekovest,” said Ekovest.

This is to ensure that IWH continues be a major shareholder of IWC.

IWH is 63%-owned by Lim through his private company, Credence Resources Sdn Bhd, while the remaining shares are held by Kumpulan Prasarana Rakyat Johor.

The proposed acquisition will be conditional upon the approvals of the board of directors and the Securities Commission.

“The board of directors of the company will deliberate on the proposal letter and decide on the next course of action. Accordingly, a further announcement will be made in due course,” said Ekovest in the statement.

Astramina Advisory Sdn Bhd has been appointed as the financial adviser for this proposed acquisition.

Meanwhile, in a separate announcement, IWC said that together with IWH, the companies have agreed to mutually terminate their earlier proposed merger scheme set out under the merger agreement.

“After taking into account the variation and reduction in the scale and scope of the proposed restructuring exercise, the implementation of the proposed merger scheme and the proposed restructuring exercise is no longer consistent with the anticipated benefits and intentions which were originally envisaged by IWH, and the parties are unlikely to be in a position to fulfil the conditions precedent contemplated in the merger agreement within the originally anticipated timeframe for fulfilment,” said IWC.

The proposed merger refers to IWH’s share swap agreement with IWC announced in March, that would have valued the joint entity at some RM6.5bil.

Back then, IWH was set to be one of the region’s biggest owners of land in cities via a merger that would see it taking over the listing status of IWC through a share swap between the two.

The new-look IWH would own up to 7,400 acres of land fronting the sea between Johor Baru and Singapore.

While this merger exercise did not include IWH’s 30% stake in Bandar Malaysia, there was much anticipation that when Bandar Malaysia was eventually developed, the valuation of IWH would increase significantly. Things, however, took a turn for the worse when the MoF terminated IWH as the master developer of Bandar Malaysia in May.