Tan Sri Danny Tan Chee Sing, founder and group executive vice chairman of Tropicana Corp Bhd (TCB) provided various advances to the property group totalling RM251.19 million to assist it weather the storm in 2021 and 2022.
According to TCB, the obstacles in the business environment in both years led to the advancements.
"The advances are interest-free, unsecured, and repayable on mutual agreement by Tan and the company. There is no written or fixed repayment schedule for the advances," TCB said in a recent filing with Bursa Malaysia.
Tan, 68, is a significant shareholder of TCB as of April 26, 2023, owning around 20.56 per cent of the group's direct stock and 32.44 per cent of its indirect stock.
He is a visionary property developer who pioneered the gated community and resort-style living concept with the luxurious 625-acre Tropicana Golf & Country Resort in Petaling Jaya, Selangor.
Tan, the younger brother of Tan Sri Vincent Tan of Berjaya Corp Bhd, established TCB in 1979.
He had initially retired in 2015, but in 2019 he came back to serve as the group's vice chairman.
After a break of three and a half years, Tan injected RM1.85 billion of his privately held land bank into TCB.
The land bank amounting to 1,116.88 acres under 12 real estate holding companies is located in the Klang Valley and Johor, with a potential gross development value (GDV) of RM24.82 billion.
According to reports, TCB obtained a discount of 17.9 per cent from the market value of the lands and a discount from the target companies' revalued net asset values.
TCB to repay Tan for advances by issuing shares worth RM180 million
TCB said it plans to repay Tan the RM180 million amount, being part of the advances it owed. by issuing 137.7 million TCB shares at an issue price of RM1.3074 per share via his wholly owned company, T Shares 1 Sdn Bhd.
It has entered into a settlement and subscription agreement with Tan to settle the amount.
The group said the board believes that capitalising on the advances as requested is "an appropriate and reasonable option" in light of its financial situation.
For the fiscal year that ended on December 31, 2022, TCB reported a wider net loss of RM435.59 million as opposed to the RM52.17 million the year before.
The group said that the proposed exercise would allow it to pay off the debt without racking up additional debt obligation or interest expenses and to repay Tan's advances without having to make a sizable cash outflow, preserving its cash and bank balances for other uses.
It added that the increase in TCB's issued share capital will also further improve the group's equity base, net assets, and gearing ratio.
The 137.68 million settlement shares that will be given to T Shares 1 constitute 6.1 per cent of the 2.26 billion enlarged issued TCB shares following the suggested capitalisation, according to TCB.
TCB said the balance of the advances amounting to about RM71.19 million will remain interest-free, unsecured, and repayable on mutual agreement by Tan and the group.