By Zuraimi Abdullah zuraimi@nstp.com.my
Published in the New Straits Times
14 August 2001
TUES: INSOLVENT MBf Capital Bhd is pinning its hopes on the country's fledgling but lucrative timeshare business
to stay afloat on the Kuala Lumpur Stock Exchange.
MBf Capital's plan to diversify into timeshare has met with the approval of some analysts. They said the local
timeshare sector, initiated in 1983, is relatively untapped, and MBf Capital seems to have made a good decision
to buy into Leisure Holidays Bhd, already a major player in the sector.
Timeshare gives, for a price, a vacationeer (timeshare holder) the rights to the exclusive use of holiday apartment
for a certain period each year. There are 17 players in the industry, with 73,910 timeshare holders with an estimated
value of RM224 million. Leisure Holidays controls 20 per cent market share.
"MBf Capital is insolvent at present. It really needs a core business to keep it as a going concern. Buying
a business which is already solid will help a lot," said an analyst.
MBf Capital, the former owner of MBf Finance Bhd, had last week proposed to buy 56.5 per cent of Leisure Holidays
from Leisure Holidays Holdings Sdn Bhd.
The latter is owned by MBf Capital's former managing director, Datuk Loy Teik Ngan.
MBf Capital is also proposing to buy 70 per cent of Leisure Commerce Square Sdn Bhd. As Leisure Commerce has a
20 per cent stake in Leisure Holidays, MBf Capital's acquisition of Leisure Commerce will enable it to own 76.5
per cent of Leisure Holidays.
The purchases are part of the group's extensive restructuring programme that includes a debt revamp which would
cut its share base by 20 times.
In a statement on Friday, MBf Capital said the par value of its shares would be consolidated to five sen from RM1
each, shrinking its paid-up capital to RM39.12 million from RM782.31 million.
The whole programme, expected to be completed by the second quarter of 2002, would see a new company (Newco) assuming
MBf Capital's listing on the KLSE's Main Board.
The acquisitions carry a RM118.44 million price tag, to be settled through the issuance of 94.7 million Newco shares
and RM23.7 million worth of redeemable convertible unsecured loan stocks.
The Leisure Commerce purchase would make MBf Capital owner of Summerset Resort Sdn Bhd, Leisure Holidays Resort
Management Sdn Bhd, Leisure Holidays Marketing Sdn Bhd and Leisure Golf & Beach Resort (Rompin) Sdn Bhd.
The restructuring programme would also allow the Loy family to be a major shareholder in Newco, with a 33 per cent
stake. (The late Tan Sri Loy Hean Heong was the founder of the MBf Group.) MBf Capital's finances were badly hit
in 1998 when the Asian financial crisis forced it to sell MBf Finance, its single largest subsidiary, to recapitalisation
agency Danamodal Nasional Bhd for RM1.
The acquisitions, said an analyst, would likely make MBf Capital profitable almost immediately because under the
terms of the sale and purchase agreements, the vendors must guarantee that Leisure Holidays and Leisure Commerce
would churn out a combined profit of RM23.69 million for three years.
Leisure Holidays' audited accounts for the financial year ended Dec 31, 1999 showed that the company made a net
profit of RM8 million and had a net tangible asset per share of RM6.4 million.
For the Leisure Commerce group, its pre-tax profit and NTA stood at RM74.29 million and RM109.27 million respectively
for its financial year ended Dec 31, 1999.
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