Albedo

Albedo: has agreed to a $774.1m RTO with a company owned by Malaysian tycoon, Tan Sri Dato’ Danny Tan and his family, that will see Albedo transformed into a major property developer in Iskandar. Albedo will buy Reflections Oasis Inc, which is in the process of acquiring 7 parcels of land in Gelang Patah, Johor, with a total area of 662.7 acres. The consideration of $774.1m will be settled through the issue of 34.55b new Albedo shares (~95% of enlarged share base) at ~2.24¢ a piece. Subsequently, Albedo intends to undertake a 17-into-1 share consolidation. The land parcels, which have a market valuation of RM2.71b, are earmarked for conversion into commercial, industrial and/or residential usage. Albedo is further negotiating for the inclusion of two parcels of land of ~233acres to be included in the agreement. Albedo plans to enter into a project mgt agreement with Msia’s Tropicana Corp (controlled by Danny Tan) to be the project mgr of the future devt of the properties. Albedo expects its existing core steel trading business to remain challenging as increased competition and softening demand for steel related raw materials continue to erode profitability. The proposed acquisition will provide an opportunity for the co. to participate in the growth of Iskandar. Albedo intends to sell its current operating business to its CEO Tai Kok Chuan, and focus on the new property business. Albedo may carry out a capital reduction exercise or any similar corporate action to distribute any cash available to shareholders prior to completion of the transaction. Based on FY12 numbers, after the proposed acquisition and disposal of existing business, Albedo’s NTA per share will drop from 0.918¢ to 0.442¢, and its loss per share will narrow from 0.99¢ to a loss of 0.01¢. Gearing will be reduced from 86% to 52%.