Hatten Land to assign Malacca mixed-use project's IP rights to Tayrona for US$60m

HATTEN Land has proposed to assign its intellectual property (IP) rights in the Harbour City integrated development in Malacca, Malaysia to Tayrona Capital for US$60 million.

The IP includes project design and concept, domain names, Internet site and marketing materials, the Catalist-listed firm said in a bourse filing on Tuesday evening.

Hatten Land was the concept originator and project developer of Harbour City - a marine-themed mixed-use development featuring a mall, a 50,000 square-foot water theme park and a luxury hotel.

Tayrona Capital is keen to acquire and complete the project as an addition to its Sagana Hotels & Resorts network of 32 hotels and resorts worldwide, as well as its Ultra Luxury Integrated Destinations collection which has operations and developments in 22 countries. The company is part of the Singapore-based Tayrona hospitality and investment group.

Aside from the IP rights assignment, Tayrona Capital plans to subscribe for 99 million new shares in Gold Mart - Hatten Land's wholly owned subsidiary that holds Harbour City - for a total of RM99 million (S$32.4 million).

With this subscription, Hatten Land's equity interest in Gold Mart will be diluted to 1 per cent from 100 per cent, while Tayrona Capital will hold a 99 per cent stake. For Hatten Land, the estimated gain on disposal of Gold Mart will be RM65.9 million.

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Hatten Land said the proposed deal offers an opportunity to raise funds amid a challenging business environment due to the novel coronavirus pandemic. It is also in line with the company's plans to monetise its assets.

Hatten Land will receive net proceeds of about S$59.7 million from the proposed IP rights assignment. These proceeds will strengthen the group's balance sheet and give it more financial flexibility to pursue new growth initiatives, said its executive chairman and managing director Colin Tan.

About S$25 million of the net proceeds will be used to settle the net amount owing by entities within the Hatten Land group to Gold Mart, while US$34.7 million will go into repaying the group's borrowings and for working capital purposes.

There are also "strong potential and synergies" for Hatten Land and Tayrona Capital to collaborate on other Malacca projects in the future, the Catalist-listed firm said.

Further, Tayrona Capital will separately pay US$240 million to another company, Wealth Express Holdings Group (WEH), to improve and complete the development and marketing of Harbour City. This amount will be for works and services that WEH will provide to Tayrona Capital in relation to the project. WEH is not related to Hatten Land's directors and controlling shareholders.

Meanwhile, the project's construction has been halted due to a legal dispute between Hatten Land and the main contractor. Tayrona Capital and WEH have thus agreed to work with Hatten Land to work out a settlement with the main contractor, so as to allow construction to resume.

Hatten Land on Tuesday said it believes the resumption of construction on the project and its eventual completion will "help retain market confidence in the track record of the company".

Hatten Land will convene an extraordinary general meeting to seek shareholders' approval for the proposed transaction.

Its shares last traded at 5.9 Singapore cents on Tuesday, up 0.1 cent or 1.7 per cent.