KUALA LUMPUR (Nov 17): YNH Property Bhd is raising RM422.5 million to pare down bank borrowings and for working capital requirements. This will be done via disposal of its two retail malls to ALX Asset Bhd in a related party transaction.

Recall that two months ago, YNH announced an asset-backed securitisation exercise to raise up to RM500 million fresh capital.

In a bourse filing on Thursday (Nov 17), YNH announced the disposal sum of RM270.5 million for 163 Retail Park shopping centre in Mont’Kiara, Kuala Lumpur; and RM152 million for Aeon Seri Manjung in Perak.

163 Retail Park is a seven-storey shopping centre sitting on 226,800-sq ft freehold land and is owned by YNH’s wholly-owned subsidiary D’Kiara Place Sdn Bhd.

Meanwhile, Aeon Seri Manjung is a two-storey shopping centre, together with car park bays sitting on a commercial freehold land measuring 1.32 million sq ft. The property is currently held in trust by Kar Sin Bhd as the registered proprietor for YNH Hospitality, a unit of YNH.

YNH said the total consideration of RM422.5 million will be satisfied by ALX Asset entirely in cash, through the issuance of the medium-term notes (MTNs) under a proposed asset-backed MTNs programme of up to RM500 million in nominal value.

Of the total proceeds, the bulk of which or RM335 million has been earmarked for repayment of bank borrowings. YNH also intends to utilise RM81.9 million for working capital requirement with the remaining of RM5.6 million for defray costs related to the proposed disposal of two properties and asset-backed MTNs programme.

Post disposal, YNH is expected to pare down its borrowings to RM472.14 million or a gearing ratio of 0.37 times, compared to 0.66 times as at Dec 31, 2021.

Under the asset-backed MTN programme, YNH executive chairman and executive director Datuk Sr Yu Kuan Chon will be subscribing to the first tranche of the junior MTNs.

Kuan Chon’s brother, Datuk Yu Kuan Huat, who is the managing director of YNH, is also deemed interested in the proposed disposal.

Kuan Chon is the single largest shareholder of YNH, holding a 24.41% direct interest and an 8.17% indirect interest. This is followed by Kuan Huat, who has a 4.48% direct interest and a 24.86% indirect interest.

ALX Asset was incorporated to carry out the functions of a special purpose vehicle in relation to the proposed asset-backed MTNs programme. It is a wholly-owned subsidiary of Premier SPV Management Sdn Bhd.

“The proposed disposals represent an opportunity for the group to unlock the value of and monetise its investments in the properties. The group is expected to record a pro forma net gain of approximately RM61 million from the proposed disposals and is expected to improve the net assets and earnings of the group,” said YNH.

The proposed disposals require approval from YNH’s shareholders at an extraordinary general meeting to be convened.

AmInvestment Bank has been appointed to act as the principal adviser for the proposed disposals, which are expected to be completed by the first half of 2023.

Having gained 56% year-to-date, shares of YNH closed two sen or 0.48% lower at RM4.13 on Thursday, giving it a market capitalisation of RM2.17 billion.

Source: EdgeProp, 17 November 2022.