■ Albedo and Malaysia tycoon strike S$774m RTO deal

■ Malaysian tycoon Danny Tan is acquiring Albedo Ltd in a proposed $774.14m reverse takeover (RTO) deal that will transform the Singapore-listed company into a major property developer in Iskandar, Malaysia's special economic zone in the state of Johor.

■ Under a conditional sale and purchase agreement entered into on Thursday, Albedo will acquire the entire issued capital of Reflections Oasis Inc for $774.14m. The vendor is Infinite Rewards Inc, a company that is fully owned by the younger Mr Tan and three children. Mr Tan owns 94% of Infinite Rewards while the three children own 2% each.

Mr Tan is behind many high-profile projects in Peninsular Malaysia such as Berjaya Times Square and has been ranked by Forbes as the 23rd richest person in the country. He is also the controlling shareholder and group executive vice-chairman of Tropicana Corp, a property developer listed on the mainboard of Bursa Malaysia.

  ■ As consideration, Albedo will issue 34.55bn new shares representing about 95% of its enlarged issued capital at around 2.24 Singapore cents each to Infinite Rewards Inc. The stock of Albedo, which was hovering around two Singapore cents before the plan was first made public in August, has since rallied to above seven cents before pulling back 0.9 cent yesterday to end trading at 6.7 cents. The stock topped the actives list with almost 1.2bn shares changing hands yesterday. 

■ Reflections Oasis Inc is in the process of acquiring seven parcels of land with a total area of 267.8 hectares in Gelang Patah, Johor. The agricultural sites have been earmarked for commercial, industrial and residential development. Based on a valuation by Knight Frank Malaysia Sdn Bhd, the total market value of the properties is about RM2.71bn (S$1.07bn) as at Aug 30, 2013.

Albedo and Infinite Rewards are also negotiating for the inclusion of two parcels of land of about 94ha in the agreement. 

■ Albedo said steel trading is expected to remain challenging. In 2012, it made a net loss of $1.37m as revenue dipped to $15.22m. In the first half of this year, it remained in the red, with a net loss of $205,000. Albedo will sell its current operating business to its chief executive officer and founder Tai Kok Chuan or his nominees. As Infinite will end up with a 95% stake of the enlarged Albedo, the latter intends to seek independent shareholders' approval for a whitewash resolution at an extraordinary general meeting. Infinite will also be applying to the Securities Industry Council for a waiver to make a general offer.

In addition, Albedo also plans to consolidate 17 shares into one to meet the Catalist rule that the issue price of each share must be at least 20 cents. 

Religare comments:
Iskandar continues to see a steady inflow of investments and this latest transaction is likely to provide another avenue for investors looking for Iskandar plays. Iskandar?s price relative to Singapore remains very affordable, and this could likely continue to drive investment demand there. We would continue to play the Iskandar theme through Crescendo (CCDO MK), which has over 1,500acres of land bank in Iskandar bought at low valuations (as low as RM7psf).

The stock trades at book (not revalued) and the company has also started its share buy-backs program. 2Q result is due out end of Sept and likely to outperform last year?s by large margin. Stock is trading at ~60% discount to our conservative RNAV ? multi bagger from here, in our view. (Read Report)