Sim Leisure to buy loss-making KidZania venture from Khazanah, Boustead

OUTDOOR theme-park developer and operator Sim Leisure Group is looking to acquire the entire stake in family attraction KidZania's licensee Rakan Riang for RM3.8 million (S$1.2 million).

Sim Leisure also plans to seek a waiver from the Singapore Exchange of the requirements relating to very substantial acquisitions (VSAs).

The proposed acquisition constitutes a VSA under Catalist Rule 1015, which states that such deals must be made conditional upon shareholders' approval and that the issuer must appoint a competent and independent valuer to value the assets, among other requirements.

Malaysia-incorporated Rakan Riang is an 80:20 joint venture between Themed Attractions Resorts & Hotels (TARH) - the leisure and tourism arm of Malaysian sovereign fund Khazanah Nasional - and Malaysia-listed Boustead Holdings Berhad.

The KidZania brand operates an interactive indoor educational and entertainment centre under the name KidZania Kuala Lumpur, where children role-play professions and activities designed to mimic adult life. The outlet is located at the Curve NX building in Petaling Jaya, Selangor.

Sim Leisure said no independent valuation was carried out in connection with the proposed acquisition, as its board believed the management team "had negotiated the most competitive purchase price and terms" in the best interests of the company and shareholders.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The purchase price took into account the financial performance of Rakan Riang for 2019 and the first six months of this year, the writing off of inter-company liabilities, as well as the deal's potential benefits to the Sim Leisure group.

Rakan Riang recorded a net loss before tax of about RM1.4 million last year and net tangible assets (NTA) of some RM13.1 million as at Dec 31, 2019. And for the first half of this year, its net loss before tax amounted to RM4 million while NTA was RM9.2 million as at June 30, 2020.

All inter-company liabilities due and owing from Rakan Riang to TARH, its subsidiary Themed Attractions and Resorts Sdn Bhd and each of its group of companies as at the deal's completion date will be written off, under the sale of shares agreement inked by the parties.

These inter-company liabilities totalled about RM12.6 million as at June 30, 2020, said Sim Leisure in a Wednesday night filing.

Separately, KidZania's Singapore business, now under liquidation, owes about S$50 million to TARH, The Business Times (BT) reported last month.

Sim Leisure on Wednesday noted that the KidZania business has an established track record, having begun operations in 2012, and the acquisition will allow the group to offer indoor themed attractions in addition to the existing outdoor ones.

Besides, Sim Leisure will be able to extend its geographical reach beyond Penang with the proposed deal, its board added.

Meanwhile in Singapore, KidZania had chalked up losses in the four years it operated in the city-state. KidZania Singapore owes S$53.4 million to more than 1,000 parties, including the claims by TARH, according to BT's report. The other creditors of KidZania Singapore included the Singapore Tourism Board, the Sentosa Development Corporation and the Ministry of Education.

Catalist-listed Sim Leisure's shares were flat at S$0.22 as at 10.56am on Thursday.