Singha Estate, Nirvana Development agree Bt1.7-billion share swap deal
Play
SINGHA ESTATE, the property arm of Singha Corporation, yesterday announced a swap deal with Nirvana Development worth more than Bt1.7 billion.
Nirvana is a well-known developer of low-rise housing estates with 10 major projects on hand, worth about Bt6 billion altogether. More than Bt3 billion worth of projects have been sold already, and the rest should be sold by the end of this year.
Nirvana has a backlog of Bt14 billion in available homes. It has five land plots to be developed this year for a total investment of Bt11 billion. Four of them will be in Bangkok and one in Pattaya.
One of the Bangkok projects will be the latest Nirvana Beyond, a Bt2.8-billion 160-unit housing estate on Rama II Road to be launched in the third quarter.
Naris Cheyklin, chief executive of Singha Estate, said the share-swap deal would be submitted to Singha Estate’s board for approval at its annual meeting on April 22, to be finalised by June.
Under the deal, Singha Estate will issue 186.5 million new shares for Nirvana in exchange for Nirvana’s existing 3.6 million shares.
As a result, Singha Estate will hold a 51-per-cent stake in Nirvana Development, while Nirvana will hold 3.8 per cent of Singha Estate.
Naris said the two companies shared the same passion and business philosophy of creating quality residential projects. Nirvana itself has a strong and intelligent working team. The partnership will create a positive synergy that yields long-term results and strengthens both parties. Singha Estate will also provide financial support and cross-marketing activities to Nirvana.
Singha itself is a high-equity brand with a long-established presence in the market spanning 82 years. It controls more than 70 per cent of the Thai beer market.
Naris said that to prepare for business expansion in the future, Singha Estate’s capital-increase plan needs to be approved at the annual general meeting of shareholders on April 22.
Apart from the private placement to Nirvana’s shareholders, Singha Estate will make an additional offer of general shares (rights offering) in a ratio of six shares for one new share at Bt3, which is worth Bt2.4 billion in total.
Existing general shareholders will also receive the company’s warrants in a ratio of 2:1, and these existing shareholders can buy the company’s shares at Bt15 each, which can be traded for the next three years. The additional rights offering to existing shareholders is expected to be completed in July.
“In addition to Nirvana, we are negotiating for other possible merger and acquisition deals with potential partners in hotel and shopping-mall developments. We have budgeted about Bt20 billion this year to be allocated to both M&A deals and our own development projects,” Naris said.
He said the company would launch two major residential projects this year, a Bt4-billion condominium development on Asoke Road, and a low-rise housing estate on Praditmanutham Road, which will cost Bt4 billion as |well.
He added that Singha Estate targeted increasing its annual revenue from the Bt4 billion expected this year to about Bt20 billion in 2019.
“We are also negotiating for a possible joint-venture agreement with an existing hotel operator in an AEC [Asean Economic Community] market, which will be our first overseas expansion,” he said.
Sornsak Somwattana, CEO of Nirvana Development, said his company was a boutique brand that targeted a different market from run-of-the-mill property firms. The company posted Bt200 million in profit last year and expects Bt250 million for 2015.
“By partnering with Singha Estate, both of our companies will be stronger and have more negotiating power. This will create a new dimension in the real-estate industry,” he said.
Sornsak said that after the share swap, Nirvana would increase its capital by Bt700 million to expand the business.
