Not much hope in Albedo’s Iskandar deal going through
Current abysmal share price seen as pointing to the deal lapsing in Sept
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Current abysmal share price seen as pointing to the deal lapsing in Sept
Anita Gabriel
14 May 2014
Pretty much no one seems to think that Catalist-listed Albedo’s mammoth $1.86-billion Iskandar land deal involving a reverse takeover by Malaysian tycoon Danny Tan will stick.
Since signs emerged in mid-March that Albedo’s transformational deal was on rocky ground and Mr Tan has had a change of heart, the counter has tanked to near lows of 1.1 cents, ending at 1.3 cents on Monday.
At current levels, a far cry from a high of 7.6 cents it reached in September last year and, more recently, 5.2 cents reached in mid-March this year, Albedo is a stark reminder on the perils of investing in penny stocks on the back of deals yet to be closed.
“The price tells you that despite what Albedo insists, the deal must be off,” said an analyst.
Indications from those close to the deal are that it will likely lapse come Sept 19, which is the long-stop date for the transaction.
Mr Tan, a seasoned businessman whose flagship firm Tropicana Corp is listed on Bursa Malaysia, clearly wants out of the deal. Albedo had earlier said Mr Tan’s representatives had requested that the deal be mutually terminated.
But the ailing steel trading firm shot back that no such mutual agreement had been reached and so the deal remained valid and binding on both parties.
Under the deal, Albedo would satisfy the purchases by issuing new shares at 2.24 cents each for the first seven parcels of land in Gelang Patah, Johor and 4.7 cents a share for the additional six plots of land which was later included in the supplemental agreement.
Last month, Albedo said it met representatives of Infinite Rewards Inc, a private vehicle of Mr Tan and family that was planning to inject huge tracts of Iskandar land into Albedo, to resolve outstanding issues.
Since then, the absence of any news indicates that Albedo has made little progress and Mr Tan is not likely to budge from wanting to scrap the deal.
Given the steady slide in Albedo’s shares, traders appear to have come to terms with the possibility that sooner or later the deal is likely to flop, notwithstanding any legal recourse on Albedo’s part.
Albedo was one of two favourite “Iskandar plays” which had stirred great excitement in the local market since late last year. The other firm, Rowsley, part owned by Singapore billionaire Peter Lim, has evidently had a lot more luck.
Fresh from completing its transformative $545-million acquisition of RSP Architects and a piece of waterfront land in Iskandar last September, the property developer recently announced that it has swung back to the black for the first quarter ended March this year.
It turned in a net profit of $1.8 million for the period, from a $4.7 million loss a year ago, bolstered by its acquisition of Singapore’s oldest and leading architect firm RSP.
Rowsley’s mega $2.2 billion Vantage Bay integrated project in Malaysia’s booming Iskandar is taking shape nicely too.
There is another Iskandar play wannabe that has yet to take form - Jubilee Industries Holdings. The Catalist-quoted firm last October unveiled a reverse takeover involving injection of Iskandar land by the family controlling Malaysian property builder UM Land.
In February, Jubilee said the exclusivity period involving the deal has been extended by six months to end August as it needed more time to carry out due diligence on the proposed acquisition.