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Saturday, February 16, 2008

Property to be enlarged E&O revenue driver

PROPERTY development will continue to be the core driver of the soon-to-be-enlarged Eastern & Oriental (E&O) group, with over RM4 billion projects to be launched within the next three years.

Managing director Datuk Terry Tham said in five years, property development would account for 60 per cent of the group's earnings, while property investment and hospitality/lifestyle business would equally contribute 20 per cent each.

"Our property investment division will allow us to maintain prime commercial assets worth RM1 billion over the next five years," he said, adding that this will provide the group with recurring income and capital appreciation.

Tham also said expansion plans are under way for the group's existing E&O Hotel and Lone Pine Hotel as well as increasing the number of its food and beverage outlets under the Delicious group.

He added that an additional 150 suites will be added to E&O Hotel's 101 suites while Lone Pine Hotel will see an increase of 50 rooms.

Tham said this at a press conference in Kuala Lumpur yesterday after the extraordinary general and court-convened meetings where shareholders voted in favour of the merger between E&O Property Development Bhd and E&O Bhd (EOB).

Expected to be fully completed by the middle of this year, the enlarged E&O group will have a market capitalisation in excess of RM1.7 billion, based on the enlarged EOB share capital as at February 11.

The shareholders of the two companies will be given three options before the merger can take place, namely full share swap, fixed cash and share combination or maximised cash.

Tham said a total of RM213 million cash funding is readily available should all the minority shareholders elect for the fixed combination option.

The full share swap option is on the basis of 1,000 unit of E&O Property shares for 1,100 unit of EOB shares while the fixed combination will involve 650 units of E&O Property shares for 715 units of EOB shares while the remaining 350 units of E&O Property shares is exchangeable for cash of RM875.

Tham also said EOB has signed a memorandum of understanding with Cultural Cluster Sdn Bhd on Thursday to form a joint-venture company for the development of a 78ha parcel of land within the Iskandar Development Region.

Cultural Cluster is a special purpose development vehicle owned by Al-Nibras 2 Ltd, a Labuan-based private fund company managed by Kuwait Finance House (Labuan) Bhd which is a wholly-owned subsidiary of Kuwait Finance House (Malaysia) Bhd.

By New Straits Times (by Roziana Hamsawi)

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