ASPL Aseana Properties Limited

21 January 2025  

Aseana Properties Limited

(the "Company" the "Group" or "Aseana")

Subscription

Posting of Circular

and

Notice of General Meeting

Aseana Properties Limited (LSE: ASPL), a property developer in Malaysia listed on the main market of the London Stock Exchange, announces that further to the announcement made on 7 January 2025 regarding the proposed Subscription, the Circular (including the Notice of GM and Form of Proxy) will be posted to Shareholders today and will also be available shortly on the Company's website at: www.aseanaproperties.com.

On 6 January 2025, the Company entered into a conditional subscription agreement (the "Subscription Agreement") with Neuchatel Investment Holdings Limited (the "Subscriber") for the subscription of new ordinary shares of US$0.05 each in the Company (the "Subscription Shares"). Under the Subscription Agreement, the Subscriber, and any parties deemed to be acting in concert (as defined by the UK Takeover Code) with the Subscriber, will subscribe for such number of Subscription Shares  in the Company constituting up to 29.9% of the Company's issued share capital, as enlarged by the Subscription, at a subscription price of US$0.08 per Subscription Share (the "Subscription"). It is anticipated that the Subscription will raise approximately $5.45 million (before expenses) for the Company once completed.

The General Meeting will be held at Level 6M Boardroom, The RuMa Hotel and Residences, 7 Jalan Kia Peng, 50450 Kuala Lumpur, Malaysia at 5.30 p.m. Malaysia time (9.30 a.m. Greenwich Mean Time) on 24 February 2025.

Enquiries:  

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes

1.     If any of the details contained in the timetable above should change, the revised times and dates will be notified to Shareholders by means of an announcement through a Regulatory Information Service.

2.     All events listed in the above timetable following the General Meeting are conditional on the passing, at the General Meeting, of the Resolution contained in the Notice of General Meeting.

3.     All references to times in this document are to London times.

KEY STATISTICS

*Includes the 13,334,000 Ordinary Shares held in treasury as at the date of the Circular

**Excludes the 13,334,000 Ordinary Shares held in treasury as at the date of the Circular

LETTER FROM THE CHAIRMAN OF ASEANA CONTAINED IN THE CIRCULAR

1.    INTRODUCTION

On 7 January 2025, the Company announced a proposed Fundraise pursuant to the Subscription Agreement to raise approximately $5.45 million (before expenses), through the issue of the Subscription Shares to the Subscriber at the Issue Price of $0.08 per Ordinary Share.

Allotment of the Subscription Shares is conditional upon the passing of the Resolution. Admission of the Subscription Shares will take place in two tranches, it being expected that:

·    34,637,499 Subscription Shares (being the First Admission Shares) will be admitted to the Official List Equity Shares (transition) category under Chapter 22 of the UKLR and to trading on the Main Market on or around 27 February 2025; and

·    conditional on the publication of the Prospectus, an estimated 33,552,501 Subscription Shares (being the Second Admission Shares) will be admitted to the Official List Equity Shares (transition) category under Chapter 22 of the UKLR and to trading on the Main Market on as soon as possible following the Subscription and no later than 23 February 2026.

The purpose of this document is, amongst other things, to explain the background to and reasons for the Fundraise and to explain why the Directors believe that the Fundraise will promote the growth and success of the Company for the benefit of the Shareholders as a whole, and seek Shareholders' approval to the passing of the Resolution at the General Meeting.

This document also contains the Directors' recommendation that Shareholders vote in favour of the Resolution. Notice of the General Meeting, at which the Resolution will be proposed, is set out at the end of this document. A Form of Proxy is also enclosed with this document for use at the General Meeting.

The Directors intend to vote in favour of the Resolution in respect of their own beneficial holdings in the Company which amounts in aggregate to 11,959,608 Ordinary Shares and represent approximately 7.5 per cent. of the Company's current voting rights.

The Directors believe that the Fundraise is the most appropriate way to raise funds for the Company. The Directors consider that the Fundraise provides greater certainty than other available means of raising additional funds in a timely fashion and minimises transaction costs.

Should the Resolution not be passed at the General Meeting, the Subscription would not be capable of being implemented in accordance with the terms of the Subscription Agreement and the Company would remain in a precarious financial position. In the absence of any alternative funding proposals the Directors of the Company would need to consider taking steps to protect the interests of creditors.

2.    REASONS FOR THE FUNDRAISE AND USE OF PROCEEDS

2.1  Background to and reasons for the Fundraise

The Company has been actively seeking to execute its strategic plan to divest its remaining assets, which include the RuMa Residences, the Sandakan Hotel and Harbour Mall, and the Kota Kinabalu Seafront Resort, with the objective of returning the net proceeds, after repaying all the Company's bank debt and other liabilities, to Shareholders.

On 30 April 2024, the Company published its full-year results for the year ended 31 December 2023, which was prepared on a non-going concern basis. This approach was necessitated by the Company's default under the Medium-Term Note programme, which financed the Company's assets, as the principal amount remained unpaid upon the Medium-Term Note's maturity date of 8 December 2023. In addition to this, the Company has faced other significant working capital challenges including funding its day-to-day operations whilst it seeks to dispose of its assets, which resulted in the Company raising $1 million through loans provided by a former director of the Company, an associate of a former director of the Company and RSMC Investment Inc. In addition to this, several changes were made to the composition of the Board during 2024, which included the departures of Robert Minty, Hock Chye Tan, Nicholas Paris, Thomas Holland, Helen Wong Siu Ming and Clare Muhiudeen as well as the appointments of the current board members, Dr Thong Kok Cheong and Tian Huat Lim.

Following the completion of various block disposals of the RuMa Residences, 20 residences remain available for sale. The Company is also engaged in discussions regarding the sale of the remaining plot of land in Kota Kinabalu. Efforts to manage the sale of the Sandakan Hotel asset included the execution of a supplemental sale and purchase agreement on 30 June 2023, with proceeds valued at RM 165 million. As part of this agreement, the Company sought an initial redemption amount of RM 61 million, intended to be paid towards redeeming the Medium-Term Note, with the remaining balance due 45 days after receipt of the redemption amount. However, following significant delays, the Company announced on 9 October 2024 that the transaction had been terminated due to the lack of progress with the purchaser. The requirement to recapitalise the Group's balance sheet has compelled the Company to undertake the Fundraise while continuing to aggressively pursue its asset disposal strategy.

2.2  Current trading and prospects

On 5 November 2024 the Company received notice from Maybank Investment Bank Berhad regarding the appointment of KPMG Corporate Restructuring PLT as receivers and managers for ICSD Ventures Sdn Bhd, a wholly owned subsidiary of the Company. This appointment pertains to a debenture dated 10 November 2011, which grants the debenture holder a fixed and floating charge over the entirety of ICSD Ventures' undertaking and assets, which includes the Sandakan Mall.

On 17 December 2024 Aseana announced that OSK Capital Sdn Bhd and Amatir Resources Sdn Bhd, a wholly owned subsidiary of the Company, agreed an extension to the repayment date of a RM 6.5 million credit facility provided to by OSK Capital Sdn Bhd and a rescheduling of the principal repayment. The credit facility was due for repayment on 30 November 2024.

As announced on 27 December 2024, the Company and its ultimate operating subsidiary, Urban DNA Sdn Bhd on 19 December 2024 filed legal action at the Kuala Lumpur High Court in Malaysia (Commercial Division) against the following persons: (i) Helen Siu Ming Wong (a former director of the Company and Urban DNA Sdn Bhd); (ii) Nicholas John Paris (a former director of the Company); (iii)Tan Hok Chye (a former director of the Company and Urban DNA Sdn Bhd); (iv) Thomas Patrick Holland (a former director of the Company and Urban DNA Sdn Bhd); (v) Jenny Lee Gyn Li (spouse of Thomas Patrick Holland); and (vi) RSMC Investment Inc. The Company will provide further updates on these matters at the appropriate time.

Effective from 1 January 2025, Leong Kheng Cheong was appointed as non-board CEO of the Company. Leong Kheng Cheong, a fellow member of the CPA Australia, brings with him over 28 years of finance and strategic leadership experience across diversified industries in FMCG & luxury retailing, commercial property development & management, automotive distribution and financial institutions across Hong Kong, Mainland China and Southeast Asia. He has held senior positions in reputable multinational corporations prior to the appointment, most recently the Finance Director, Group Planning & Reporting of the DFI Retail Group (a pan-Asian retail conglomerate of the Jardines Group) in Hong Kong, as well as the Financial Planning & Analysis Director of Tesco Property Limited (a subsidiary of Tesco Plc) in China.

2.3  Use of proceeds

The Fundraise is anticipated to raise proceeds of approximately c.US$5.45 million (before expenses). It is intended for the net proceeds of the Fundraise, in addition to the Company's existing available cash, to be utilised to address the critical financial challenges affecting its operations.

Repayment of Bank Facilities

A significant portion of the Subscription proceeds will be utilised to repay outstanding bank facilities to forestall foreclosure actions initiated by the receivers and managers of ICSD Ventures, the owner of the Sandakan Hotel asset, which is currently in receivership. The remaining balance of the repayment on the facilities is expected to be sourced through new debt financing. The success of the sourcing of this debt financing will be dependent on the outcome of the Subscription.

Operating Capital

To sustain the Company's ongoing operations, a portion of the Fundraise proceeds will be utilised towards working capital to cover essential operating expenses including: (i) payment of fees to advisers and consultants engaged in the financial and operational restructuring of the Company, including legal action to safeguard some of Aseana's assets; and (ii) payment of salaries and related benefits to employees to ensure continuity of operations.

This allocation is essential to stabilise the Group's financial position, maintain operations, and ensure the long-term viability of the Company.  The Board believes these measures are in the best interests of Shareholders and will support the Company's efforts to restore shareholder value.

3.    DETAILS OF THE FUNDRAISE

Pursuant to the terms of the Subscription Agreement the Subscriber conditionally applies for the allotment and issue to it of such number of new Ordinary Shares as is equal to the Rule 9 Threshold at the Issue Price of US$0.08 cents per Ordinary Share. The Subscription is conditional, inter alia, on:

i.   the Resolution having been passed without material amendment;

ii.  First Admission; and

iii. there having been no material adverse change in the business, operations, financial condition, assets, or prospects of the Company from the date of the Subscription Agreement until the passing of the Resolution without material amendment.

The Company and Subscriber intend that on allotment and issuance, the Subscriber's aggregate interest in Shares will not exceed the Rule 9 Threshold. In the event that the number of Subscription Shares on allotment and issuance would result in the Subscriber's aggregate interest in the Shares exceeding the Rule 9 Threshold, the Company, in consultation with the Subscriber, shall determine the number of Subscription Shares as shall result in the Subscriber's aggregate interest in the Shares not exceeding the Rule 9 Threshold.    

Under UKLR 22.2.1 it is a continuing obligation of the Company's listing that all of the Ordinary Shares are admitted to trading. In order to meet this obligation, under the Subscription Agreement the Subscription is conditional on First Admission and, in accordance with UKLR 22.2.5, the Company undertakes to take all such steps as are required in order to ensure Second Admission occurs as soon as possible and by not later than 23 February 2026.  In the event that Second Admission does not occur by 23 February 2026 the Company would be in breach of its obligation under UKLR 22.2.1 and the admission of its Ordinary Shares could be cancelled.

Save for Shareholder approval at the General Meeting, the conditions pursuant to the Subscription Agreement may be waived in whole or in part by the Subscriber in its absolute discretion by notice in writing to the Company. The Subscriber may agree in writing to extend the time for satisfaction of any or all of these conditions.

4.    BACKGROUND ON THE SUBSCRIBER

Neuchatel Investment Holdings Limited is wholly owned by Mr. Lim Kian Onn, a highly regarded Malaysian banker, businessman, and investor with an extensive track record in the financial services, aviation and the hospitality sectors amongst others.

Mr. Lim is a member of the Institute of Chartered Accountants in England and Wales (ICAEW) and is recognised as a prominent figure in the Malaysian business community. His notable achievements include: (i) co-founding ECM Libra Investment Bank; (ii) being a founding shareholder in prominent ventures, amongst them AirAsia X, Tune Hotels, Tune Insurance, and Epsom College Malaysia, the Asian campus of Epsom College UK; (iii) serving as the Chairman of Plato Capital Limited, a Singapore-listed company, and the ECM Libra Group, listed on the Kuala Lumpur Stock Exchange; and (iv) co-founding the Ormond Hotel Group, an award-winning hospitality group with several accolades, including Asia's best airport hotel and Malaysia's best boutique hotel. Mr. Lim is currently Executive Chairman of the Ormond Hotel Group.

Mr. Lim played the lead role as Deputy Chairman of AirAsia X from 2020 to 2022 where he was instrumental in navigating AirAsia X through financial difficulties and implementing strategies to stabilise and revitalise the airline. Mr. Lim's leadership was pivotal in restructuring initiatives aimed at ensuring the airline's survival and positioning it for recovery and growth in the competitive aviation industry.

The Subscription with Neuchatel Investment Holdings Limited represents a strategic alignment for the Company with a seasoned and respected investor whose experience in financial restructuring, corporate governance and business development, particularly in the hospitality industry, coupled with extensive Malaysian banking relationships is expected to potentially bring significant value to the Company.

5.    GENERAL MEETING 

Notice of the General Meeting of the Company to be held at Level 6M Boardroom, The RuMa Hotel and Residences, 7 Jalan Kia Peng, 50450 Kuala Lumpur, Malaysia at 5.30 p.m. Malaysia time (9.30 a.m. Greenwich Mean Time) on 24 February 2025 is set out at the end of this document.

At the General Meeting, Shareholders will consider the resolution outlined in the notice of meeting, below.

6.    ACTION TO BE TAKEN

Shareholders will find enclosed with this Circular a Form of Proxy for use in connection with the General Meeting. Shareholders are requested to complete and return the enclosed Form of Proxy as soon as possible.

To be valid, Forms of Proxy for use at the General Meeting must be completed and returned in accordance with the instructions printed thereon to the registered office of the Company at 1st Floor, Osprey House, 5-7 Old Street, St. Helier, Jersey, JE2 3RG, Channel Islands by post as soon as possible and, in any event, so as to arrive no later than 5.30 p.m. Malaysia time (9.30 a.m. Greenwich Mean Time) on 21 February 2025 (or, in the case of an adjournment, not later than 24 hours (excluding weekends and public holidays) before the time fixed for the holding of the adjourned meeting). CREST members can also vote by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in the Notice. The completion and return of a Form of Proxy will not preclude a Shareholder from attending the GM and voting in person should he subsequently wish to do so.

The results of the votes cast at the General Meeting will be announced as soon as possible, once known, through a Regulatory Information Service.

7.    RECOMMENDATION

The Board considers the Fundraise to be in the best interests of the Company and its Shareholders as a whole and therefore the Directors unanimously recommend that Shareholders vote in favour of the Resolution to be proposed at the General Meeting, as they intend to do in respect of their own and associated holdings of 11,959,608 Ordinary Shares (representing approximately 7.5 per cent. of the Company's current voting rights).

Shareholders should note that in the event that the Resolution is not be passed at the General Meeting, the Subscription would not be capable of being implemented in accordance with the terms of the Subscription Agreement and the Company would remain in a precarious financial position. In the absence of any alternative funding proposals, the Directors of the Company would need to consider taking steps to protect the interests of creditors.

DEFINITIONS