SoftBank Group Corp is planning to pump an extra $1 billion or more into WeWork by renegotiating a warrant agreement struck before falling valuations delayed the U.S. office-sharing startup’s IPO, the Financial Times reported.
The plan would increase the Japanese firm’s initially planned investment of $1.5 billion in WeWork as part of the agreement, giving the U.S. company the right to receive the money in April next year in exchange for Class A common stock.
SoftBank and its Saudi-backed Vision Fund are WeWork’s biggest backers and have already funneled more than $10 billon into the U.S. company, including the promised $1.5 billion.
The potential new investment from SoftBank could unlock more financing options for WeWork, which is in talks for a $3 billion to $4 billion loan from a consortium of banks contingent on it raising additional capital, FT added.
A new deal would reduce the price per share at which SoftBank acquires WeWork stock, giving it a larger stake in the unprofitable property group, FT said on Wednesday, citing people briefed on the matter. It was unclear how renegotiations would affect the Japanese group’s valuation of its investment, FT said.
WeWork declined to comment on the report. SoftBank did not immediately respond to a request for comment.
SoftBank invested in WeWork parent We Company at a $47 billion valuation in January, but investor skepticism led to a potential IPO valuation of as low as $10 billion earlier this month, Reuters reported.
The startup postponed its IPO last week, and on Tuesday, its co-founder Adam Neumann resigned as CEO, giving up the majority of his voting control after SoftBank and other shareholders turned on him.
WeWork appointed two insiders as co-CEOs and said Neumann will stay on the board as non-executive chairman.
We Company said it is evaluating the “optimal timing” for an IPO.
In the run-up to the planned IPO, investors questioned WeWork’s corporate governance standards, as well as the sustainability of its business model, which relies on a mix of long-term liabilities and short-term revenue.
The lowered valuation is a blow to SoftBank as it tries to amass $108 billion for its second Vision Fund. Reuters sources said it was likely that SoftBank would have to pony up more cash to support its biggest bet, or take a writedown in case of an IPO.
SoftBank’s stock is down 8% since the beginning of this month.
The renegotiation of the warrant agreement is one of several options being considered, FT said.
The talks are in early stages and SoftBank, led by billionaire Masayoshi Son, could decide against investing altogether, the business daily said. – Reuters
MALAYSIA’S Budget 2020 will be tabled in Parliament on Oct 11. As announced by Finance Minister Lim Guan Eng, the theme for this year’s budget is “Shared Prosperity: Engendering High-Quality Inclusive Growth Towards High Income Economy”.
Growth across Asia is set to moderate this year and next year against the backdrop of slowing global demand and persistent trade tensions. The Malaysian Institute of Certified Public Accountants (MICPA) lauds the government’s intensified efforts to achieve sustainable high-quality growth for the benefits of every segment of our society.
With this objective in mind, we highlight below a wish list for Budget 2020:
A simplified tax system for small businesses to contribute to the country’s tax base
Small businesses such as hawkers, small contractors and petty traders often do not have sufficient resources to maintain complete books of accounts for tax purposes. A simplified system of taxation may be considered for small businesses whereby their income may be ascertained as a reasonable percentage of their turnover. Different percentages may be applied for different types of businesses, based on statistics compiled by the government in consultation with business chambers. This would allow small businesses to significantly ease their cost of doing business and burden of tax compliance. At the same time, the country’s tax base can be quickly broadened by the participation of small businesses.
For small businesses that decide to maintain complete books of account for tax purposes, they should be allowed to do so without adopting the simplified method of computing their income so long as they consistently do the same for future years.
Deduction of financing cost incurred on purchase of real property for Real Property Gains Tax (RPGT) purposes
Since Jan 1, 2010, interest paid on loans taken by a purchaser to acquire a real property is no longer deductible for RPGT purposes when the property is sold. For the majority of property buyers, without financing they would not be able to buy their properties. In other words, the interest expense incurred by them is very much a significant and inevitable cost of acquisition. If the interest expense is not allowed in computing their gain liable to RPGT when the property is sold, the gain is artificially inflated by the disallowance. This can result in unfair financial burden given that the RPGT payable if the property is sold within three years of ownership is at the rather high rate of 30%.
In order that RPGT is charged on the actual gain derived from the sale of a property, it is proposed that the financing cost be allowed in computing gains liable to RPGT. This is also in line with the equitable practice before Jan 1, 2010.
Encouraging SMEs to scale up through strategic acquisition
In 2017, SMEs contributed 37.1% to Malaysia’s GDP and 66% of employment . Given that the SME segment is an important engine of growth for the country, measures should be introduced to encourage SMEs to actively grow their businesses and raise their competitiveness through strategic acquisitions. In particular, SMEs need to re-position themselves to seize opportunities from the digital economy.
A mergers and acquisitions (M&A) scheme may be introduced under which a SME which acquires the ordinary shares of another company within a qualifying sector will be given an M&A allowance equivalent to 25% of the value of acquisition subject to a cap of RM10 million for each year of assessment. Double deduction can also be granted on transaction costs on qualifying share acquisition, subject to an expenditure cap. The objective is to spur SMEs to scale up and actively participate in the global value chain, Industrial Revolution (IR) 4.0 and digitalisation.
Tax relief for interest incurred by first-time house buyers
With effect from the year of assessment 2009, a Malaysian citizen and resident is granted a tax relief for interest paid on a loan taken to purchase residential property (limited to only one unit) provided he has not derived any income from the property. The relief is up to a maximum of RM10,000 for each year of assessment for a period of three consecutive years and is given only if the agreement for the purchase was executed on or after March 10, 2009 but not later than Dec 31, 2010.
In order to assist Malaysians to own their first residential home, we propose that the interest relief above be re-introduced for first-time buyers of residential properties priced up to RM1 million, taking into account the prices of residential properties in the country’s main cities. At the same time, measures should be considered to introduce a higher margin of financing, longer loan tenure and lower interest rates for first-time buyers within this category.
CHRISTCHURCH: Sime Darby Bhd has secured the Caterpillar dealership in New Zealand for industrial business and is strengthening its motors unit’s commercial business in Australia and New Zealand via the acquisition of Gough Group Limited for NZ$211 million (RM572 million).
Sime Darby’s subsidiary Sime Darby (NZ) Holdings Limited has entered into a conditional sale and purchase agreement with privately-owned Gough Holdings Limited to acquire Gough Group.
Gough Group has the Caterpillar dealership with service territory in New Zealand and interests in the transport and materials handling business in New Zealand and Australia. The New Zealand Caterpillar dealership is one of the oldest dealerships of Caterpillar equipment outside of the US, with a history of 90 years.
Separately, Gough Group’s transport and materials handling businesses span across construction, infrastructure, transport and power system industries, distributing a wide range of premium global brands such as SAF, Palfinger and WABCO in New Zealand and Australia.
Gough Group currently employs 950 people across a network of over 50 locations in Australia and New Zealand.
Sime Darby group CEO Datuk Jeffri Salim Davidson said the Gough Group transaction, which would be the largest for Sime Darby since the pure play restructuring exercise in 2017, is an opportunity for it to enhance its relationship with Caterpillar and gain exposure to the construction and forestry sectors in New Zealand, further reinforcing Sime Darby Industrial’s footprint in the Asia Pacific region.
“The Gough Group’s transport and material handling portfolio will complement Sime Darby Motors’ commercial truck business in New Zealand, enable growth in aftersales operations and broaden our suite of franchises, essentially strengthening our position in Australasia,” he said in a statement today.
Gough Group grew its revenue by more than 18% in 2018 to NZ$540 million from the previous year, driven by improvements in sales for both its Caterpillar and transport and material handling businesses.
Sime Darby is investing in the next stage of growth to build on Gough Group’s leadership position in the New Zealand and Australian markets.
In Australia, Sime Darby is represented by Hastings Deering, one of Caterpillar’s leading dealers, as well as through Sime Darby Motors’ dealerships for BMW, Volvo, Ferrari and Rolls Royce in Brisbane and Porsche in Sydney.
In New Zealand, Sime Darby Motors operates under the Continental Cars and City Nissan dealerships in Auckland representing brands such as BMW, Porsche, Volkswagen, Audi, Ferrari and Nissan. It also has a commercial transport arm representing brands such as Volvo, Hino, Mack and UD Trucks.
The transaction will be fully funded by bank borrowings, on a cash-free and debt-free basis and is subject to New Zealand’s Overseas Investment Office approval and the typical completion conditions. The deal is expected to be completed by Sept 30, 2019.
KUALA LUMPUR, July 23 ― Mah Sing Group Bhd has acquired 2.21 hectares (ha) of prime land near Kepong Metropolitan Park, Selangor for about RM94.8 million for the development of its affordable serviced apartment, M Luna. In a statement today,…
PETALING JAYA: Integrated Logistics Bhd’s wholly owned subsidiary IL Power Sdn Bhd is acquiring a piece of agricultural land in Kuala Muda, Kedah measuring 78.92ha from Kai Sik Latex Products Sdn Bhd for RM24.17 million.
According to the group’s Bursa filing, the Land is intended to be developed into industrial land for purposes of solar energy ventures. However, the development plan for the development has yet to be finalised at this juncture.
“The acquisition of the land and upon its development into solar power project is expected to contribute positively to the future revenue and earnings of the group.”
Integrated Logistics will fund the land purchase through a combination of internally generated funds and/or bank borrowings.
PETALING JAYA: Industry experts have lauded the government’s move in introducing property crowdfunding as an alternative form of financing for first-time homebuyers but warned homebuyers to be wary of the risks before participating in such schemes.
CBRE-WTW managing director Foo Gee Jen (pix) commended the Securities Commission Malaysia (SC) for taking such an initiative as it is the right move to provide other options for home ownership.
“However, I have my reservations about the scheme. The SC must be very firm with the message that this platform is an alternative investment and that it does not equal to total ownership of the house (unless the homebuyer successfully acquires the house at the end of the tenor),” he told SunBiz.
He said it is important to educate the public on how the scheme works as well as the risks involved.
“The homebuyer is not really a homebuyer until the end of the tenor. The homebuyer is an investor. The homebuyer/investor must have the mindset that they are coming in as an investor. It is crucial to distinguish the difference between purchaser and investor,” he added.
Through the platform, homebuyers can raise financing through the crowd and use the period of tenor to accumulate financial resources.
The platform is only open to Malaysian first-time homebuyers aged 21 years old and above while the residential property listed on the platform must be completed with Certificate of Completion and Compliance, and valued at a maximum of RM500,000.
Homebuyers are required to stay in the property for the duration of the tenor but are allowed to sublet rooms. The financing limit is up to 90% of the value of the property.
The SC also released the revised guidelines on the requirements and obligations of a property crowdfunding platform operator, to support the integrity of the scheme and protect investors’ interests.
The requirements include minimum shareholders’ funds of RM10 million; obligation to provide fair, clear and timely information to both homebuyers and investors; and exit certainty at the end of the agreed tenor.
While property crowdfunding may help some first-time homebuyers start their journey towards home ownership, Foo does not foresee first-time homebuyers rushing into such schemes.
“Not many people will be able to get the concept as it is not so straight forward compared with home loans. The homebuyer/investor must understand how the instrument works and what are their risk profiles. Homebuyers must be mindful when participating in property crowdfunding,” he said.
“I would say that this platform provides easier entry for investors who want to eventually be the buyer,” he added.
Foo urged the SC to be very strict with the independent property valuers to avoid the platform becoming a tool for people with vested interests.
“The valuer at the starting point should be the same valuer at the exit as well. This is because a valuer may disagree with another valuer’s pricing. Having the same valuer at the starting and exit points would eliminate this issue as the valuer cannot disagree with his or her own pricing.
“We want valuers to be objective in their valuation. Therefore, governance on the valuer has to be very objective. In order to protect public interest, a certain level of governance, capacity and track record is needed on the part of the valuer,” he said.
MALACCA: Flexible packaging manufacturer Daibochi Bhd (formerly Daibochi Plastic and Packaging Industry Bhd) has proposed to acquire the entire equity of flexible plastic packaging (FPP) player Mega Printing & Packaging Sdn Bhd (MPP) for RM125 million cash.
Established in 1997, Malacca-based MPP manufactures downstream flexible packaging comprising roll-form and pre-made pouches with laminated structures mainly for food & beverage applications, including confectionary, snacks, noodles and powdered beverages.
The purchase consideration, which will be funded through internally-generated funds and/or bank borrowings, represents an enterprise value over earnings before interest, tax, depreciation and amortisation of 8.07 times based on MPP’s audited financial results for the financial year ended Dec 31, 2017.
Daibochi managing director Thomas Lim said getting on the acquisition trail places Daibochi on the higher growth trajectory, even as it strengthens its position as a super regional player in the FPP segment.
This acquisition sees two leading FPP giants with strong track records joining forces, possessing cumulative experience of close to 70 years.
“The exercise not only combines our respective prowess in product portfolio and manufacturing capacities, but also extends our reach through the wider network of customers and suppliers,“ Lim said in a statement.
Moreover, the proposed acquisition effectively pools resources including human resources, technical expertise and market insight, in addition to enhancing raw material purchases and other efficiency measures that would be beneficial for customers of both Daibochi and MPP.
“From a larger perspective, MPP would come onboard the Scientex Bhd growth partnership platform within the Daibochi fold, to fulfill increasing demand from multinational corporations and brand owners locally and abroad.”
Daibochi became a 61.9% subsidiary of Scientex on April 1, 2019 following a share sale by several Daibochi vendors and conclusion of the mandatory general offer by Scientex.
MPP’s manufacturing plant in Kawasan Perindustrian Teluk Emas, Malacca has a production capacity of 264 million metres of FPP, with a utilisation rate of 68.3% in 2018.
Together with Daibochi’s manufacturing facilities in Ayer Keroh and Jasin, Malacca, the combined production capacity would increase by 33.3% from 792.53 million metres to 1,056.53 million metres per annum.
MPP achieved RM7.8 million net profit on RM128.8 million revenue in FY2017. 86.5% of MPP’s FY2017 revenue was derived from Malaysia-based customers, with the balance 13.5% from export markets such as Philippines, China, Mauritius and Kuwait.
As at Dec 31, 2017, MPP recorded positive cash flow from its operating activities amounting to RM10.4 million, and had fixed deposits, bank and cash balance of RM15.6 million as well as bank borrowings of RM3.4 million, which translates into a net cash position.
The proposed acquisition is conditional upon MPP fulfilling conditions precedent, and is subject to the approval of the board of directors and shareholders of Daibochi at an EGM to be convened.
Barring any unforeseen circumstances, the acquisition is expected to be completed in the third quarter of 2019. The acquisition is expected to benefit immediately from the consolidation of MPP’s revenue and earnings contributions.
“The proposed acquisition is value-accretive on multiple fronts. Existing and potential customers would be able to leverage on our multi-location production facilities and enhanced economies of scale as part of a larger entity, while Daibochi and MPP would be able to amass larger production capacity, derive resource-synergies, and undertake product development to build long-term sustainability.”
PETALING JAYA: Handal Resources Bhd is acquiring a 51% stake in Borneo Seaoffshore Engineering Sdn Bhd (BSOE) for RM25.5 million in a related party transaction.
The offshore crane services provider told Bursa Malaysia that it had entered into a conditional share sale agreement with SeaOffshore Capital Sdn Bhd for the proposed acquisition. SOC is also a major shareholder of Handal.
The proposed acquisition comes with a profit guarantee of RM5 million for the financial year ending June 30, 2020.
Of the purchase sum, Handal said some RM15.86 million will be satisfied via the issuance of 42.86 million new Handal shares at an issue price of 37 sen per share while the balance RM9.64 million via the issuance of 26 million new irredeemable convertible preference shares (ICPS) in Handal at an issue price of 37 sen per ICPS.
BSOE in the provision of maintenance of riser and pipeline isolation services located at offshore platforms and/or offshore rigs.