In a Bursa Malaysia announcement yesterday, AHIB recommended that these shareholders vote in favour of the I&P acquisition and the subsequent rights issuance to raise funds.

“After evaluating the key terms of the I&P sales and purchase agreement, we note that the key terms of the I&P SPA as a whole is reasonable,” it said.

“The I&P purchase consideration was derived based on the market value as appraised by the independent valuers, we are of the view that the I&P purchase consideration is fair,” AHIB added.

The property company also proposed to buy 342 acres in Bangi from PNB, in which it has a majority two-thirds control, for RM447.5mil in cash.

These corporate exercises will see SP Setia’s total landbank increasing by almost 80% to 9,728 acres, AHIB said.

“This will potentially enhance the group’s future revenue and earnings. The proposed I&P acquisition is in line with SP Setia’s land banking strategy and will fast track SP Setia’s efforts to increase its landbank in the Klang Valley and Johor Bahru,” it said.

The independent advisor noted that the proposed rights issuance and subsequent conversion of RCPS-i B to SP Setia’s shares will increase the company’s capital base and further strengthen the financial position of the SP Setia group.

According to the circular, it is anticipated that 54.8% of the I&P purchase consideration will be funded through equity, 41.1% through debt while 4.1% will be funded through internally generated funds.

“We note that upon completion of the deals SP Setia’s net gearing will reduce to 0.11 times under the maximum scenario of a fully diluted basis.

The reduced gearing will benefit the enlarged SP Setia group in terms of negotiations for more favourable rates on its borrowings in the future,” AHIB said.