Lasseters surges on proposed Australian asset disposal

Singapore

SHARES of Catalist-listed Lasseters International Holdings reached a three-year high on Tuesday after it proposed a disposal of its Australian assets for A$105 million (S$108.5 million), an amount nearly six times that of the group's market capitalisation of S$18.8 million before the announcement was made.

The integrated resort operator's counter jumped to an intraday high of 6.6 Singapore cents, up 2.7 cents or 69.2 per cent as at 9.04 am. The last time the counter closed near this level was in October 2017.

Lasseters' shares closed at 5.2 Singapore cents on Tuesday, up 33.3 per cent or 1.3 Singapore cents, with 19.9 million shares changing hands. It was among the most heavily traded counters on the Singapore Exchange for the day. At the current price, Lasseters has a market capitalisation of S$25.1 million.

In a filing on Monday, Lasseters International said two of its wholly-owned subsidiaries have entered into various agreements with entities under Sydney-based Iris Capital, an integrated development and hospitality group based in Australia.

The agreements would see Lasseters selling various assets associated with its casino, hotel, convention centre and health club operations in Australia.

Lasseters' subsidiary Ford Dy-nasty will retain ownership of the Lasseters brand. Ford Dynasty has entered into a separate brand licence deal with one of the Iris Capital entities to grant an exclusive, royalty-free licence to use the Lasseters brand in Australia.

Lasseters International said it will retain the right to use the Lasseters name and brand outside Australia and in the company names of its dormant Australian subsidiaries.

With this sale, Lasseters International would be exiting its Australia businesses.

The company has said it wants to focus its investment in Malaysia instead, where it will be involved in property management, property development and the hospitality business.

According to its statement, Lasseters International said the current pandemic has depressed land values and thus provides an opportunity of a lower entry point. It will also look at expanding its property management services business in Malaysia.

At the same time, Lasseters International said, Australia's gaming sector is "highly regulated". Recent issues the sector is dealing with include alleged money laundering and possible links to organised crime, which may impact the risk appetite of financial institutions.

This means the group might have to come up with additional funding for capital expenditure requirements to further uplift the value of the property, in the event these financial institutions do not provide additional funding.

Moreover, there is inherent risk and uncertainty around the possibility of an increase in gaming tax on July 1, 2022 - Ford Dynasty's tax review date.

Lasseters International added that it has rationalised all its loss-making Australia assets, and there are limited economies of scale in operating a single asset in a remote location. The assets are located in Alice Springs, in Australia's Northern Territory.

The book value of these assets stood at A$121 million as at Dec 31, 2020. This includes a revaluation surplus of A$75.3 million.

Out of the A$105 million consideration, which is still subject to adjustments, 61 per cent or A$63.6 million will be used for the repayment of bank borrowings.

Another 28 per cent will be used for working capital and investments in the property management and property development business.

The rest will be used for the repayment of tax liability and the payment of professional fees and expenses incurred in relation to the proposed disposal.

The group plans to convene an extraordinary general meeting to seek shareholders' approval for the proposed transaction.

The three substantial shareholders of Lasseters International - Kamal Tan, Jaya Tan and Tan Yet Meng - have undertaken to vote in favour of the proposed disposal. Collectively they own 55.4 per cent of Lasseters International.