Mainboard-listed The Place Holdings has entered into a sale and purchase agreement (SPA) with New Lanwa International Trading Limited for the disposal of 420,980 ordinary shares in the share capital of The Place Yuntai Investment.
The disposal represents 1.5% of the total issued and paid share capital of The Place Yuntai Investment for a total consideration of HK$25 million ($4.3 million).
The consideration values The Place Holdings’ Mount Yuntai project at approximately $289 million with a land size of around 270,500.64 sqm.
The group will recognise a gain of $3.9 million from its sale. The sale is also expected to have a positive impact on the group’s financial performance for the 1HFY2021 ending June 30.
Mount Yuntai’s land site was originally valued at RMB112 million ($22.7 million) when the group completed its acquisition of 80% of the enlarged share capital of Tianjie Yuntai Wanrun (Xiuwu) Property Development.
In May 2021, WorldUnion Property Assessment, one of China’s leading valuation companies, revalued the land site to RMB481 million.
See: The Place Holdings' land site in China revalued 329% higher at RMB481 mil
The change in price is mainly due to the change in zoning from commercial to residential and the increase in land-use rights assigned to the land from its existing 40 years to 70 years.
The Place Yuntai Investment is a Singapore-incorporated company with an issued and paid up share capital of $28.1 million comprising 28.1 million ordinary shares.
It directly holds 80% of the registered capital of Tianjie Yuntai Wanrun (Xiuwu) Property Development Co.
As at June 29, The Place Holdings is the immediate sole shareholder of The Place Yuntai Investment.
New Lanwa International Trading is a Hong Kong-incorporated company. It is in the business of general trading and investment holding.
The proposed disposal presents an opportunity to the group to realise the value of the sale shares at a premium to its investment cost.
In light of the increased valuation of the land site, The Place Holdings feels that New Lanwa will be encouraged to enhance the competitiveness and sustained performance of The Place Yuntai Investment and Wanrun Co.
The proposed disposal is also in line with The Place Holdings’ efforts to maintain a strong balance sheet.
Mount Yuntai Project is within Mount Yuntai Tourist Township, which is located at the entrance of Mount Yuntai Geopark. It is surrounded by nine populated Chinese cities such as Zhengzhou, Jiaozuo, Luoyang, Kaifeng, Xinxiang and Jingcheng.
“We have had numerous enquiries from interested buyers and partners all this while. In order to minimise the dilution of our equity stake in The Place Yuntai Investment, we limited the stake sale with a purpose to showcase the deep underlying value of this project. The equity stake sale at a valuation of $289 million reflects the strong potential and confidence of our Mount Yuntai’s property project,” says Fan Xianyong, executive director and CEO of The Place Holdings.
As the Covid-19 pandemic eases, we are seeing a boost in domestic tourism as well as a growing demand for travel, wellness and cultural immersion activation in China. The growing popularity of Mount Yuntai Geopark within China’s domestic tourism industry has accelerated the rapid development of Mount Yuntai Tourist Township in recent years,” he adds.
“As Mount Yuntai Tourist Township develops into a well-known international tourism and ecoliving destination, we believe that the deep underlying value of our property project will be unlocked and we look forward to harness more opportunities within the Mount Yuntai Tourist Township.”
Shares in The Place Holdings closed 0.6 cent lower or 4.5% down at 12.7 cents on June 29.
