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Ellipsiz, Lum Chang JV buys 580,000 sqm Bintan land for S$4.8m

SUPER Makmur Sejahtera, a joint venture between Mainboard-listed Ellipsiz and Lum Chang Holdings, has purchased 580,000 square metres of land on Bintan island for S$4.8 million in cash, the companies announced in bourse filings on Wednesday. 

Ellipsiz owns 75 per cent of Super Makmur via its wholly-owned subsidiary Cyan Bay. The remaining 25 per cent is held by Lum Chang via its wholly-owned unit Bluesky Real Estate Investment. The JV has a paid-up share capital of S$246,000.

In its filing, Ellipsiz said that the land will be used to expand its real estate investment portfolio, given the "variety of potential tourism-related uses" for the land. Likewise, Lum Chang said that the acquisition is a "prime investment opportunity" for tourism-related purposes, given its strategic location near the Indonesian islands of Karimun and Batam. 

Super Makmur purchased the land comprising 54 plots from an unrelated Indonesian company. The land is located at Berakit, the north-eastern part of Bintan island.

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Separately, both companies also inked an agreement on Wednesday on the governance of Super Makmur. Ellipsiz will nominate two directors to the board of Super Makmur, while Lum Chang will nominate one director. In addition, Ellipsiz will also nominate one commissioner. 

The formation of the Super Makmur JV is an interested-party transaction (IPT) under listing rules. Ellipsiz's chief executive Kelvin Lum is the son of Lum Chang's managing director David Lum, and nephew of Lum Chang's executive chairman Raymond Lum. David Lum is also the beneficial owner of Ellipsiz's controlling shareholder, an entity called Bevrian.

Since July, Ellipsiz has conducted S$3.6 million worth of IPTs with Lum Chang, representing about 3.6 per cent of Ellipsiz's S$101 million in net tangible assets as at end-June. Ellipsiz's audit and risk committee has deemed the Bintan land acquisition and JV not prejudicial to Ellipsiz's interests. 

For illustrative purposes, the transactions would have increased Ellipsiz's loss per share for FY2019 ended June to 0.35 cent from a loss per share of 0.31 cent. This would be due to a loss of interest income, in using internal resources to fund the acquisition. The acquisition and JV are not expected to have any impact on Lum Chang's results for FY2020 ended June. 

Shares of Ellipsiz closed flat at S$0.41 on Wednesday, while shares of Lum Chang ended down one cent to S$0.34.