KUALA LUMPUR: Impiana Hotels Bhd may need to look into alternative business opportunities in an effort to turn things around and avoid being classified as an affected listed issuer under Practice Note 17 (PN17) of the Main Market Listing Requirements.
The hotel owner and operator aborted plans to purchase a 70 per cent equity interest in Cafelink (M) Sdn Bhd to expand its food and beverage (F&B) operations.
Impiana had hoped to increase the size of its F&B operation by adding Cafelink's SOULed OUT and WIP restaurant franchises to its current portfolio.
In a bourse filing on June 16, the hotelier said the company and Cafelink's major shareholder and director, Choo Kok Yeow, mutually agreed to terminate the Memorandum of Understanding (MOU) signed on May 10.
"The termination is due to the change of business plan of the parties and is not expected to have any effect on the issued share capital and substantial shareholding of the company," it said.
During the signing of the MoU, Impiana Interim chief executive officer Datuk Voon Him Hoo reportedly said that the company was eager to explore numerous synergistic potential opportunities in order to improve long-term value for its shareholders.
Business expansion plans
Impiana has been considering business options outside of the hotel and resort industry in order to increase its revenue stream, earnings, and cash flow.
In 2020, it asked shareholders for approval to diversify into property development and projected the new business to contribute at least 25 per cent of its net profit.
The company had identified the redevelopment of Impiana Resort & Residences Cherating, with a gross development value of RM413.1 million, as its first foray into the real estate market.
This, according to Impiana, will enable it to create a new revenue stream from the sale of the service suites at the Impiana Residences Cherating, undertaken by a subsidiary of its company, Impiana Cherating Sdn Bhd.
Impiana Cherating sits on 30-acre beachfront land and will be developed in three phases, with expected completion this year, according to a statement released by the company in September 2021.
The company said that phase one, with an estimated GDV of RM154.4 million, saw 126 units purchased by Silver Max Asia Pacific Labuan Ltd., with the remaining 18 units and eight villas being purchased by an unidentified buyer.
Phases two and three, with a projected GDV of RM225 million, would be developed in partnership with Artha Global Sdn Bhd, it said.
Impiana had anticipated the entire redevelopment project to provide a total pre-tax profit of RM116 million after deducting gross development expenditures projected to be RM297.1 million.
Despite diversifying into property development, the company's net loss widened from RM2.86 million to RM3.63 million during the first quarter ending March 31, 2023. This is despite the fact that revenue increased by 61 per cent as a result of fees and costs related to the redeemable convertible notes.
Another hurdle for Impiana with RM44.36mil lawsuit from Public Bank
Impiana told Bursa last week that Public Bank Bhd is suing the company's subsidiary Astaka Mekar Sdn Bhd for RM44.36 million over an alleged failure to settle the outstanding amounts owing under four term loan facilities and an overdraft facility.
"This news only served to sour the company's situation further. Impiana must now settle this legal dispute with Public Bank amicably while also expanding its property development activities and looking for new commercial opportunities to weather the storm," said a market observer.
According to Impiana, case management for the lawsuit against Astaka Mekar is scheduled for June 22.
Also named as defendants in the lawsuit are Data Sepadu Sdn Bhd, Impiana Sdn Bhd, and Datuk Seri Ismail Farouk Abdullah, who served as the facilities' guarantee.
Impiana said that it is still too early to predict how the lawsuit will affect the defendants' finances and business operations, as it will depend on how the lawsuit turns out.
The company said the defendants are in consultation with their solicitors and will announce any material developments in the suit in due course.
In the meantime, Impiana said it will start negotiations with Public Bank to reach an amicable settlement.