Malaysia's Sim Leisure Group aims for Catalist debut on March 1

PENANG theme park developer Sim Leisure Group is headed for a Catalist debut on March 1, it said in an offer document lodged on Friday.

It plans to offer 26.4 million shares to the public at S$0.22 apiece, valuing the group at S$29.5 million.

Gross proceeds of roughly S$5.8 million will be used to fully redeem outstanding redeemable convertible preference shares held by Penang Development Corp, the group has said.

Under an investment agreement inked in 2016 to finance one of the group's two parks, Penang Development Corp - a state government entity - holds two million such shares, with a maturity date in June 2021. The investment agreement also gives Penang Development Corp the right to take over all of the group's principal subsidiary in the event of a payment default or certain other conditions.

The offer document noted that one risk to business is how Sim Leisure Group has previously relied on external financing, such as the Penang Development Corp share issuance, as well as shareholders' loans, to fund its capital expenditure. This led to a negative working capital position as at both Dec 31, 2017 and June 30, 2018, it said.

"There is no assurance that such funding, if required, will continue to be available on acceptable terms. Any inability to obtain sufficient funding to improve, maintain or add attractions to our theme parks could negatively affect the attractiveness of our theme parks and could materially adversely affect our business, operations and financial performance," the document warned.

Also, the initial public offering (IPO) would put about one-fifth of the company in public hands, but Sim Leisure Group founder and chief executive Sim Choo Kheng and his spouse Silviya Georgieva Georgieva will hold a combined 78.4 per cent stake, which was flagged as another risk in the offer document.

Sim Leisure Group most recently earned a net profit of RM2.05 million (S$680,000) in the first half of 2018, on a revenue of RM8.45 million, according to unaudited results provided in its offer document.

The group now runs two theme parks in Penang - Escape Adventureplay and Escape Waterplay - with a third park set to open in the first half of 2019.

Mr Sim said in a statement that the planned listing "will increase our visibility and provide us with the impetus to scale our business model into new markets across the region".

The group plans to expand into China and South-east Asia, with Bangkok, Jakarta, Manila and Ho Chi Minh City named as potential sites. It also signed a non-binding memorandum of understanding in September 2018 to build and run a theme park in Linyi city, in China's Shandong province.

ZICO Capital is the sponsor and issue manager for the IPO, and RHB Securities Singapore and UOB Kay Hian are its joint placement agents.