Best deals of the year: Best corporate restructuring: Win-win deal for MRCB and MRCB-Quill REIT

Best deals of the year: Best corporate restructuring: Win-win deal for MRCB and MRCB-Quill REIT

This article first appeared in The Edge Malaysia Weekly, on December 21 – 27, 2015.

platinum-sentral_mm36_tem1089_theedgemarketsWith the purchase of Platinum Sentral, MQREIT’s asset base ballooned to RM1.56 billion

WHEN Malaysian Resources Corp Bhd (MRCB) announced the sale of Platinum Sentral to MRCB-Quill REIT (then Quill Capita Trust) for RM740 million, it was a win-win situation that also marked a new era for the two companies.

The RM740 million deal — a mix of cash and shares — resulted in MRCB walking away with RM476 million cash and 206.25 million new Quill Capita Trust units issued at RM1.28 each, giving MRCB a 31% stake in the enlarged share capital of MRCB-Quill REIT (MQREIT). The REIT gives it an option to monetise mature assets. Also, MRCB walked away with a RM230 million gain from the disposal.

As for MQREIT, its asset base ballooned from RM838 million to RM1.56 billion, making it the seventh largest local REIT based on asset size, from No 12 previously.

But the deal didn’t just end there.

MRCB suggested a RM1 billion injection of assets into MQREIT on a yearly basis and in that vein, recently announced the proposed sale of 33-storey office tower Menara Shell for RM640 million to the REIT. MRCB has offered MQREIT first right of refusal to purchase any office property it plans to dispose of.

Considering MRCB’s large number of buildings and landbank that it can erect buildings on, there could be more of such dealings between the two companies.

MRCB’s total assets, with large tracts slated for development, as at end Sept 30, 2015, amounted to RM6.63 billion. In October, MRCB inked a joint-venture agreement to take up a 70% stake in CSB Development Sdn Bhd for RM269.5 million. The latter has a mandate to construct the Cyberjaya City Centre, which has a gross development value of RM10 million.

It is also worth noting that MRCB acquired a 41% stake in MQREIT’s management company, Quill Management Sdn Bhd (formerly Quill Capita Management Sdn Bhd). This enables MRCB to have continued influence on the operations of Platinum Sentral and other properties under the REIT.

corporate-restructuring_mm36_tem1089_theedgemarkets

Source : TheEdgeMarkets

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