Ireka to finalise definitive agreements with Aseana next week

Ireka Corp Bhd is finalising definitive agreements with its London Stock Exchange (LSE)-listed associate company, Aseana Properties Ltd, in respect of a de-merger arrangement.

In a filing with Bursa Malaysia yesterday, Ireka said it is targeting that the definitive agreements be finalised and signed by May 29, 2020.

Ireka had on May 7, 2020, signed non-binding heads of agreement with Aseana to take part in a corporate exercise to separate its interests and its concert party Legacy Essence Ltd and other shareholders (which together own about 50 per cent in Aseana), from those of Aseana.

Both Ireka and Aseana had targeted to sign the agreements in respect of the de-merger arrangement by May 21, 2020.

Following the revamp, there would be a complete separation of interests of Aseana from Ireka.

Aseana would buy back shares of the participating shareholders on a set date in exchange for an in specie distribution of certain assets it owns to the participating shareholders, together with the settlement of amount owing between the Ireka group and Aseana.

The assets comprise The RuMa Hotel and Residences in Kuala Lumpur, a portion of the land owned by Aseana in Kota Kinabalu, Sabah, and certain residual assets from past developments.

Loss-making Ireka has a 23.07 per cent stake in Aseana, which was set up as a property investment fund to invest in property projects in Malaysia and Vietnam.

Ireka's net loss widened in the fiscal year 2019 to RM29.08 million compared with RM15.99 million the year earlier.

It had been in the red partly due to its share of losses in Aseana and also because the latter's accounting practice did not allow for the recognition of progressive development profits.

Its share of losses from Aseana in 2019 was RM2.6 million.

Aseana started to divest its assets since 2015 with plans to dispose of a total of six assets. The assets it has sold over the years include Aloft Kuala Lumpur Sentral Hotel for US$104.3 million and hotel suites and serviced residences at The RuMa Hotel and Residences for US$74.2 million.

The other four assets are the International Healthcare Park in Ho Chi Minh City, Vietnam; Four Points by Sheraton Hotel, and Harbour Mall, both of which, are in Sandakan, Sabah; and land in Kota Kinabalu, Sabah that was meant for a seafront resort and residential development.

According to Aseana, the six assets had a realisable net asset value of US$183.40 million (RM766.382 million) as of December 31, 2018.