KUALA LUMPUR: Majority shareholders of hotel operator Grand Central Enterprises Bhd (GCEB) are proposing to take the company private and de-list it from the Main Market of Bursa Malaysia for 46-sen a piece.
Trading in GCEB shares which was suspended on Monday, will resume on Tuesday, July 23, 2024.
It last traded at 37 sen a share, giving it a market capitalisation of RM72.9 million. Its 52-week high was 44 sen a share.
The proposal was by Tan Chee Hoe Sons Sdn Bhd (TCHS) and Hotel Grand Central Limited (HGCL), which collectively hold a 72.65 per cent stake in GCEB.
GCEB owns five hotels in Kuala Lumpur, Langkawi, Kuantan, Kuala Terengganu and Kuching under the Hotel Grand Continental brand.
In a filing with Bursa Malaysia Securities, TCHS and HGCL intend to acquire the remaining 53.87 million shares in GCEB not already held by them for 46 sen apiece.
GCEB and its subsidiaries have been recording losses for the past 10 consecutive financial years up to the financial year ended Dec 31, 2023 (FY23) and the latest three-month financial period ended 31 March 2024.
"As a result of the weak financial performance, GCEB Group has not declared any dividends since the FY19,"GCEB said.
In addition, GCEB Group's hotels (in particular the five hotels under the Hotel Grand Continental brand located in Kuala Lumpur, Langkawi, Kuantan, Kuala Terengganu and Kuching) have an average building age of 31 years old and recorded low occupancy rate of an average of approximately 24 per cent in 2024 (computed based on the average daily occupancy rate of all hotels from 1 January 2024 to 31 May 2024).
"Given the conditions of these hotels, a refurbishment is necessary to maintain standards and attract guests to improve the financial performance of GCEB Group. Based on the foregoing and after taking into consideration the rise in labour costs and prices of goods, paired with new supply of hotel rooms and intense competition from new hotels within the vicinity, we expect GCEB Group's upcoming performance and earnings visibility to remain tough moving forward," it added.
Any conservation of cash from the privatisation will be used for the refurbishment of the existing hotels.
"GCEB shares have been thinly traded, with a simple average monthly trading volume of 182,937 shares for the past one year up to and including July 19, 2024, being the last trading day prior to the date of this proposal letter, which represents a liquidity turnover of approximately 0.35 per cent," it added.