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Mercurius to buy a half stake in Thai developer

Jun 17. 2019
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By THE STRAITS TIMES
ASIA NEWS NETWORK
SINGAPORE

MERCURIUS Capital Investment is looking to acquire half of a Thai private property developer, Grand Bay Hotel, for more than Bt310 million (S$13.6 million), as well as jointly develop a resort in Phuket, Thailand.

The Catalist-listed firm said in a bourse filing yesterday morning that it will buy a 50 per cent stake in Grand Bay from Thailand-listed real estate developer Apex Development.

For the acquisition, Mercurius will pay some Bt360 million plus half of the total construction and development costs for the Sheraton Phuket Grand Bay Resort.

The purchase price will be paid in four instalments, with the final instalment to be paid by August 30. The price was arrived at following arm’s length negotiations between Mercurius and Apex.

Mercurius will conduct private placement exercises as well as public offerings to finance the acquisition.

On Sunday, it proposed a S$6 million share placement to 12 individuals, including existing shareholders. 

Part of the net proceeds raised from the placement will be used to fund the Grand Bay purchase.

Mercurius will also develop the Phuket resort project with Grand Bay as a joint-venture (JV) vehicle.  Upon completion, the resort will be operated by Starwood Asia Pacific Hotels & Resorts or its affiliates.

The Sheraton resort is part of an integrated development that also comprises residential properties, which are not part of the joint venture. 

Both companies will negotiate the option of bulk purchase by Mercurius for the remaining residential units of this development from Apex.

Grand Bay owns land parcels at Ao Po, Phuket, held under the land title deeds 23710, 23711, 54006, 52371, 57204, and 33561, and measuring about 35.31 rai (5.64 hectares, 56,496 square metres).

The land parcels are mortgaged to KTB Securities (Thailand) for Bt800 million in credit facilities extended to Apex.

The fair value of the parcels was Bt564.96 million as at August 30, 2018.

Grand Bay is 99.99 per cent-held by Apex, with the remaining 0.01 per cent owned by two individuals – Apex’s chairman and chief executive officer, as well as a director of Apex Development.

Grand Bay’s net loss was Bt600,000 for the fiscal year ended December 31, 2018, while its net book value and net tangible assets value each amounted to Bt343.3 million for FY2018.

On June 12, Mercurius and Apex also agreed in principle that they were interested in forming JVs for two mixed-use development projects at Yao Beach in Krabi, Thailand – the Club Med Krabi Resort and Residences, and the Sheraton Krabi Yao Beach Resort and Residences.

Apex was introduced to Mercurius by Dennis Ng Kok Kee, who owns business consultancy firm Treasure Pte Ltd. 

Ng will be paid a commission in the form of shares in Mercurius, and Mercurius is still negotiating with him on the amount of the commission.

Ng is also one of the placees of the S$6 million placement announced on Sunday, whereby he will subscribe for 12.5 million placement shares for a total of S$500,000.

Yesterday, the company requested for its trading halt to be lifted.

Mercurius shares last traded on June 11 at 4.2 cents.

 

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