Eastland Equity issues renounceable rights to fund Malaysia land purchase

Kota Kinabalu, Sabah, Malaysia(Image: Jason Thien / CC BY 2.0)

Eastland Equity issued renounceable rights of up to 294.8 million shares with up to 147.4 million free detachable warrants. Following the stock sale, the firm has planned to fund the acquisition of an approximately 23,485-square-foot lease-hold site in Kota Kinabalu, Malaysia, which will be developed into a mixed-use complex with two hotel properties. 

Eastland Equity will use any excess funds to repay bank borrowings and working capital. The firm's filing with Bursa Malaysia stated the issuance has an indicative price of 13.5 sen per rights share based on six rights shares for every five Eastland shares and one warrant per two rights shares subscribed for. These warrants will be convertible into one new Eastland share per warrant at an undetermined exercise price. According to the filing, Eastland subsidiary FBO Land (Setapak) entered a conditional sales and purchase agreement with property developer PCK Properties for a RM23.26-million land acquisition. The land, a commercial property in Kota Kinabalu's CBD, is near office buildings, commercial shops, shopping complexes and hotel properties. 

Eastland's entire project within the CBD has a gross development value worth RM356.92 million and a gross development cost of RM282.05 million. The mixed-commercial project breaking ground in early 2018 at the site will have a 28-story hotel and a 28-story hotel suite building with four floors of retail space, six floors of parking space and a basement.

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"The Proposed Acquisition is in line with Eastland’s strategy to diversify its property development into new geographical areas," Eastland told Star Online. "The Board is of the view that the prospects of the Proposed Development is good due to the strategic location of the Land within the high-growth area of central Kota Kinabalu and its close proximity to the main tourist attractions such as Sabah’s popular Sunday market."

Meanwhile, the firm's Bandar Tasek Raja project has already reached phase 2 of development. It is slated to be complete within three years.