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Tuesday, February 15, 2011

IGB, unit ink deal to streamline retail ops

KUALA LUMPUR: IGB Corp Bhd has entered into a heads of agreement (HOA) with its 75%-owned KrisAssets Holdings Bhd to divest Mid Valley City Gardens Sdn Bhd (MVCG) to the latter to rationalise and streamline its retail operations.

In a filing with Bursa Malaysia yesterday, IGB said it entered into an HOA with KrisAssets for the proposed disposal of 100,000 ordinary shares of RM1, representing the entire issued and paid-up capital in MVCG, for a cash consideration.

MVCG is the owner and operator of The Gardens Mall, a retail property in Mid Valley City. The Gardens Mall, located adjacent to Mid Valley Megamall, has a strong tenant mix comprising about 200 stores.

“The proposed disposal will also enable the IGB group to streamline its property holdings whereby its retail properties will be consolidated and held under KrisAssets,” IGB said in the statement.

IGB said both parties had reached an understanding that the purchase consideration would be based on the net tangible assets of MVCG based on audited financial statements for the financial year ended December 31, 2010 (FY10) and the market value of The Gardens Mall and the land it sat on, with an indicative value of RM820mil.

“The proceeds from the proposed disposal will be utilised for new investment opportunities. IGB will continue to derive benefits from the future growth of The Gardens Mall via KrisAssets,” it said.

In a separate statement, KrisAssets said the proposed acquisition would substantially increase the net lettable area of its retail assets, noting that upon completion of the proposed acquisition, it would own two prime retail properties in Kuala Lumpur.

“The proposed acquisition is a key step to merge the property investment business in the retail segment of IGB and would enable KrisAssets and its subsidiaries to achieve the required scale to enhance its competitiveness in the retail sector,” KrisAssets said.

It added that there would be potential synergistic benefits arising from the proposed acquisition which include cost savings, operational streamlining and collaborative marketing strategies in Mid Valley City as a whole.

IGB's net profit jumped 70.5% to RM53.1mil for the fourth quarter ended Dec 31, 2010 (FY10) from RM31.1mil previously. Revenue for the period rose 29% to RM214.9mil against RM166.3mil a year ago due to higher contributions from all operating divisions.

For the full year, IGB's net profit rose to RM174.3mil from RM158.9mil on a 11.9% rise in turnover to RM719.4mil. It has declared an interim dividend of 5% less tax for FY10.

In addition, a share dividend was also declared for FY10 by way of distribution of a tax-exempt share dividend on the basis of one IGB treasury share for every 100 existing IGB ordinary share of 50 sen each.

By The Star

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