KUALA LUMPUR: Property developer Ewein Bhd wholly-owned subsidiary, Ewein Land Sdn Bhd (Ewein Land) inked share sale agreement (SSA) with Consortium Zenith Construction Sdn Bhd (CZC) to acquire a further 16% equity interest, comprising 160,000 ordinary shares in Ewein Zenith Sdn Bhd (Ewein Zenith).
A filing with Bursa Malaysia showed that upon completion of the acquisition, Ewein Land’s equity interest in Ewein Zenith will increase from 73% to 89% and Ewein Zenith will become an 89%-owned subsidiary of Ewein.
According to the SSA, Ewein Land shall pay RM160,000.00 in cash to CZC for the shares sale.
Thus, Ewein will be able to capture 89% of the profit generated by Ewein Zenith for the financial year ending 31 December 2018 (FY2018) as compared to only 60% in FY2017.
This will mark a significant increase in profit generation for Ewein.
CZC shall own the remaining 11% equity interest.
Pursuant to the increase in Ewein Land’s equity interest in Ewein Zenith as the result of the acquisition, Ewein Land shall also advance RM21.28 million to Ewein Zenith to be utilised by the latter to settle a further sum of RM21.28 million.
This will be allocated for the balance amount owing to CZC for the land known as Lot 702 situated in Section 1, Bandar Tanjong Pinang, Daerah Timur Laut, Negeri Pulau Pinang.
The said land, measuring approximately 3.67 acres, was previously acquired from CZC for RM133 million, leaving only a reduced sum of RM14.63 million, as balance owing to CZC.
Ewein said in the statement that the acquisition will be completed within three (3) business days from the receipt of its financier’s consent, being Public Bank Bhd.
Ewein Zenith is currently constructing its maiden property development project in Penang, a luxury sea-front development known as 'City of Dreams' in Bandar Tanjong Pinang, overlooking Gurney Drive.
The project is expected to be completed by end 2019.
City of Dreams has a gross development value of RM800 million and is situated on a 3.67-acre land.
The 40-storey freehold property development features 572 units ranging from 1,100 sq ft to 1,350 sq ft in size.
Commenting on the rationale of the Proposed Acquisition, Ewein said:
"With the increased ownership of Ewein Zenith, Ewein will have even more control of Ewein Zenith, which forms the development arm of Ewein.
"This will maximise the profits of the development division, attributable to Ewein and shall benefit its shareholders.
The Board of Directors is of the view that the prospects of the acquisition is positive and will be in the best interests of the Group," the company said in a statement.