Malaysia's Iskandar Waterfront to raise $338 mln to shrink debt

Liz Lee

KUALA LUMPUR, March 16 (Reuters) - Iskandar Waterfront

Holdings Sdn Bhd (IWH) , which recently offered to

buy out its listed unit Iskandar Waterfront City Berhad (IWC)

, said the merged entity was looking to raise about

$338 million this year by issuing new shares.

IWH, controlled by Malaysian property tycoon Lim Kang Hoo,

will issue around 600 million new shares to raise funds as part

of the merger to cut debt, a senior official as well as the

company's financial adviser told Reuters.

While the price for the shares has not been finalised, IWH's

financial adviser Astramina Advisory estimates that at 2.47

ringgit per share - a 10 percent discount to IWC's closing price

on Wednesday - the merged entity would raise about 1.5 billion

ringgit ($338 million).

"This would substantially pare down the 2 billion ringgit

debt consolidated under IWH after the merger. A lot of parties

have expressed interest (for the placement), some of them are

foreign corporates," said Wong Muh Rong, managing director for

Astramina Advisory.

The shares will be issued and privately placed to

institutional investors, she said.

Last week, IWH announced plans to buy out the 61.7 percent

stake it does not already own in IWC. It will then assume IWC's

listed status on Bursa Malaysia. Shares of IWC have jumped as

much as 59 percent since the announcement.

The merger deal is expected to be completed in six to nine

months, after which IWH targets a secondary listing in Hong

Kong, China or Singapore within 12 months.

Lim, who is also IWH's executive vice chairman, said

secondary listing plans will materialise when the merged

company's market capitalisation hits 30 billion ringgit. The

company has not decided how much it will raise.

IWC's market capitalisation is currently 2.26 billion

ringgit, Thomson Reuters data shows.

Lim told Reuters he was considering a secondary listing in

Hong Kong or China "because that is the market from which we

brought in the investors (who) have deep pockets".

Separately, Lim said development works for the city centre

project Bandar Malaysia's Phase 1 was expected to begin by

April. In December 2015, IWH and China Railway Engineering Corp

bought a 60 percent stake in Bandar Malaysia from troubled

Malaysian state fund 1MDB for 7.41 billion ringgit.

($1 = 4.4340 ringgit)

(Reporting by Liz Lee; Editing by Himani Sarkar)