4 Sep 2015 07:00
RNS Announcement
04 September 2015
VinaLand Limited
Divestment of stake in HAS Project
VinaLand Limited ("the Company" or "VNL"), the AIM-quoted investment vehicle established to target strategic segments within Vietnam's emerging real estate market, announces that it has divested its stake in the company that owns the HAS Project (the "Project") located in the central region of Quang Nam Province, Vietnam to Gold Yield Enterprises Limited, an entity of Chow Tai Fook, who will inject both equity and expertise into developing and operating the large scale hospitality and entertainment development. Since Genting's withdrawal from the project back in 2012, VinaCapital (the "Manager") had been sourcing a new partner with appropriate experience to participate in this Project.
The Project is a future development site and was acquired by VNL in 2007 for development into a mixed use township incorporating residential, commercial, hospitality, leisure and gaming. The disposal of this land is consistent with the Company's strategy to divest selected assets by the end of the current term, as stated at the time of VNL's extraordinary general meeting ("EGM") in November 2012, and net proceeds of the realisations will be returned to shareholders, subject to the Board's discretion and consideration in respect of VNL's working capital requirements. Subsequently, VNL has disposed its entire stake of 100 percent in the HAS Project at a total valuation 53.5 percent above the unaudited 30 June 2015 net asset value of the investment and 36.3 percent above the net asset value at the time of VNL's EGM in November 2012 (including adjustments for additional investments during this period). This transaction will result in net proceeds of USD 10.5 million for VNL, and at the time of this announcement 100 percent of the proceeds have been received.
Given the complexity of the Project and the ongoing challenges it faces, the buyer has requested that VinaCapital continue to be involved in the Project. Therefore, as part of this disposal the Manager has assumed responsibility for completing a number of conditions that remain outstanding as at the transaction date, effectively underwriting the transaction for VNL. The Manager is also obligated to purchase an additional stake of 9.36 percent in the Project, and will also receive an equity interest of 22.55 percent in return for the transfer of certain economic rights to gaming it had secured in respect to the Project.
In respect to the equity interest, VNL and the Manager will be entering into an excess return sharing deed that entitles VNL to a share of the Manager's profits, if the Manager disposes of the stake within three years and realises a gain exceeding 25 percent IRR (the "Sharing Deed). Although the Directors of VNL consider that likelihood that the conditions will be met is remote at the time of the announcement and the quantum of the profit share is not considered material to VNL, under the AIM Rules, a transaction between the Company and the Manager where the potential upside is uncapped constitutes a related party transaction. VNL's Directors consider, having consulted with its nominated adviser, that the terms of the Sharing Deed are fair and reasonable insofar as its shareholders are concerned.
Speaking on the transaction, Managing Director, David Blackhall stated, "The Project was acquired in 2007 on the basis that essential infrastructure was to be completed within a given timeframe and market conditions supported such a large scale development, however, these did not eventuate as expected. VNL had completed initial investments into the Project, however continuing with such a large scale, long term development would require significant future capital commitments which does not fit with VNL's current cash return strategy. This transaction is the eleventh full disposal since VNL's EGM on 21 November 2012. We believe this is a very positive outcome for our shareholders given VNL's current mandate and will allow for additional capital to be distributed as a result."
Enquiries:
Jonathon Trewavas
VinaCapital Investment Management Limited
Investor Relations
+84 8 3821 9930
jonathon.trewavas@vinacapital.com
Philip Secrett
Grant Thornton UK LLP, Nominated Adviser
+44 (0)20 7383 5100
philip.j.secrett@uk.gt.com
Hiroshi Funaki / William Marle
Edmond de Rothschild Securities, Broker
+44 (0)20 7845 5960
funds@lcfr.co.uk
David Benda / Hugh Jonathan
Numis Securities Limited, Broker
+44 (0)20 7260 1000
funds@numis.com
Andrew Walton
FTI Consulting, Public Relations (London)
+44 (0)20 7269 7204
andrew.walton@fticonsulting.com