Landmarks Bhd is taking over a property located at Bintan Island, Indonesia for SGD9.78 million (about RM29.77 million) that will give it the flexibility to undertake future upgrades or expansion of its Treasure Bay Bintan development.
The 338-hectare Treasure Bay Bintan is a waterfront resort city development.
It comprises Natra Bintan a Tribute Portfolio Resort, a tented luxury glamping resort operated by Marriott International; Chill Cove, an activity hub; ANMON, a desert-inspired glamping concept for nomadic communities; an organic farm; and marine life discovery park.
Landmarks told Bursa Malaysia given that Treasure Bay Bintan is core to the group's profitability and growth, it is essential and strategically important that it undertakes the proposed acquisition.
The subject property was leased to Landmarks pursuant to a lease agreement dated June 1, 2015, entered between PTBW (as the lessor) and PT Treasure Development Services, a subsidiary company of Landmarks group (the lessee).
Landmarks said the property is currently being used as the main entrance building of Treasure Bay Bintan and at present, the monthly rental under the Property Lease Agreement (PLA) is SGD67,500 (about RM205,538) per month and the lease under the PLA may be extended up to December 31, 2023.
Landmarks said the PLA has since been novated to and taken over by PT Treasure Bay Attractions, also a subsidiary company of Landmarks group.
It said the proposed acquisition will result in a rental saving of about RM3 million per annum to the Landmarks group.
Landmarks said the proposed acquisition will be undertaken without putting any constraints on the cash flow of the group as a substantial amount of the purchase consideration will be satisfied through the new issuance of Landmarks shares.
Tiara Gateway, a wholly-owned subsidiary of Primary Gateway Sdn Bhd, which in turn is a wholly-owned unit of Landmarks group is acquiring the rights and interest of the land and property through the acquisition of the entire equity interest in PT Buana Wisatama (PTBW).
Landmarks said that Tiara Gateway had on December 2, 2020, entered into a conditional share sale agreement (SSA) with Mark Wee Liang Yee for the proposed acquisition.
The purchase consideration of SGD9.78 million is to be satisfied through the issuance of 84.83 million new ordinary shares in Landmarks at an issue price of 34 sen per Landmarks share and cash of SGD303,750 (about RM924,919), it said.
"The purchase consideration of RM29.77 million represents a premium of about 37.16 per cent to the appraised market value of RM21.7 million and represents a premium of 2.92 per cent to the appraised investment value of RM28.92 million," Landmarks said.
Landmarks said that the proposed acquisition is deemed to be a related party transaction in view of the interests of a certain director and major shareholders of the group.
It said that upon completion of the proposed acquisition, Tiara Gateway will ultimately hold the entire equity interest in PTBW and accordingly, PTBW shall become a wholly-owned subsidiary of the Landmarks group of companies.
Landmarks added that it intends to sub-lease available retail spaces to suitable third party retailers.
On future prospects, Landmarks said that the travel, tourism, and hotel industry's outlook remains uncertain and challenging.
"The Covid-19 pandemic has yet to see any signs of easing and travelling restrictions are still being imposed by many countries. These challenges, particularly the health risks caused by the pandemic will continue to have a huge negative impact on the Landmarks group's operations and overall business," it said.
It said Treasure Bay Bintan was temporary closed during the period from April 2020 to July 2020 due to the Covid-19 pandemic.
However, the Landmarks group expects that the activities in the development to gradually pick-up once the borders between Indonesia and Singapore open.