IWCITY (1589) - IWCITY: A Bridge Too Far
In December 2015, TRX City Sdn
Bhd (TRX City) announced that it had entered into the share sale
agreement with IWH CREC Sdn Bhd (IWH CREC) for the latter to take a 60%-stake in
the 485-acre Bandar Malaysia project. IWH CREC is a 60:40 JV company owned by Iskandar
Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn
Bhd (CREC).
In March this year, IWH announced a proposed merger of with
its listed associate Iskandar Waterfront City Bhd (IWCity). This will
effectively give the new IWH/IWCity a 36%-stake in the Bandar
Malaysia project.
In addition to its stake in TRX
City, the new IWH/IWCity will also own
up to 7,400 acres of land fronting the sea between Johor Baru and Singapore.
IWH currently owns 1,072 acres mainly located in Tebrau, Johor as well as 3,900
acres of waterfront land, of which 80% has been reclaimed.
TRX
City announced 3 hours
ago that that the Bandar Malaysia development agreement with IWH CREC has
lapsed due to failure to meet the payment obligations outlined in the
Conditions Precedent under the SSA. For more, go here.
Interestingly, IWH CREC has disputed claims by TRX City about
1 hour ago (here). It stated categorically: “IWH CREC is concerned with the content of the termination notice and the
subsequent press release issued by TRX
City, which, given the
factual matrix, does not fully and accurately reflect the circumstances and
conduct of the parties in this matter.” (Or, in plain English, you are not telling the truth!) I wonder whether there is a political angle to this break up. Maybe, too much drum-banging by this guy?
Happily Ever After It Was Not...
Without the Bandar Malaysia project, the IWH/IWCity merger could still
go thru. However, the centerpiece of the merger is of course the stake
in Bandar Malaysia. The potential collapse of the Bandar Malaysia deal
would reduce IWH/IWCity to be just another Johor property stock. With
that, I believe we could see a sharp correction in IWCity share price
tomorrow. As the strong support is at RM1.75 - a long way down from its
high perch above RM3.00 - I advise caution if you want to trade on this
stock.
Chart: IWCity's monthly chart as at May 3, 2017 (Source: Malaysiastock.biz)
IWCITY (1589) - IWCITY: A Bridge Too Far
http://nexttrade.blogspot.my/2017/05/iwcity-bridge-too-far.html
