KUALA LUMPUR: i-City property developer I-Bhd plans to raise up to RM100 million via a related party transaction to pay off advances from major shareholder Sumurwang Sdn Bhd, and for working capital.
The company plans to issue up to RM100 million worth of redeemable preference shares at a price of RM1 per share to Sumurwang.
In a filing with Bursa Malaysia Securities, I-Bhd said the issuance will allow the company to raise funds to settle advances extended by Sumurwang for their current BeCentral Residences project, and to be used as working capital.
Sumurwang is deemed interested because it owns a direct 57.24 per cent stake and indirect 6.38 per cent stake in I-Bhd. Non-executive chairman Tan Sri Lim Kim Hong, and Sumur Ventures Sdn Bhd, the major shareholders of I-Bhd are deemed interested in the proposals as Lim and Sumur Ventures Sdn Bhd are shareholders of Sumurwang.
Around RM45 million of the monies raised will go to settling advances from Sumurwang, within three months.
The advance from Sumurwang was mainly for the property development business including BeCentral Residences.
Another RM40 million will be for working capital for the property development business of the company and its subsidiaries, encompassing projects such as BeCentral Residences.
While about RM14.65 million will be allocated for I-Bhd's working capital needs over 36 months, covering operational expenses and general corporate purposes.
BeCentral comprises two towers with a combined 986 units and is presently under construction, slated for completion by the end of 2025.
"The total project cost for BeCentral Residences is estimated to be RM336.7 million, of which approximately 45.35 per cent (approximately RM152.7 million) has been spent."The remaining 54.65 per cent (approximately RM184.0 million) of the project cost is expected to be funded from the proceeds of the Proposed Issuance and internally generated funds," the filing said.
The property developer said the proposed issuance is a suitable means to raise required funds for the company, following careful consideration of various fundraising options, including bank loans.
"It enables I-Bhd to raise funds without security and at a rate lower compared to the group's existing bank borrowing rate which ranges between 4.21 per cent to 5 per cent," it said.
I-Bhd's overarching plans and strategies revolve around leveraging i-City as the cornerstone for building a robust property development business and constructing a diversified property portfolio. As at April 1, 2024, the property development projects that are still under construction are BeCentral Residences and 8 Premier corporate/ retail spaces. Together with Twenty8 corporate/ retail spaces, the total gross development value (GDV) is RM0.7 billion. The projects are part of I-Bhd's plan of re-building its property development pipeline.
As at April 1, 2024, I-Bhd only has a RM201 million outstanding redeemable convertible unsecured loan stocks.
I-Bhd's share price was trading unchanged at 23.5 sen a share as at 3.42pm.