The Edge 1 Nov 10: Top Global's Capitol plan

Dated 1 Nov 10
Top Global's Capitol plan

Stock in focus as historic Capital Theatre gets new lease of life Catalist traded TOP GLOBAL has long operated below the radar screens of analysts, apart from making a few forays into the top-volume list. This week, however, the co could find itself in the limelight.

Top Global is part of a consortium that has successfully bid to redevelop the much sought after Capital site on North Bridge and Stamford Roads. Formerly a shell, Top Global has so far developed one property, Top Residence, near Kovan MRT.

The loss making company recently made news after major shareholder Sukmawati was installed as chairman and CEO and her son Hano Maeloa as managing director.

Together, the duo owns 54% of Top Global. Widjaja is business Oei Hong Leong's younger sisiter and also known as Oei Siu Hoa. Last week, the URA announced it had awarded the tender to redevelop the Capitol site to Perennial Capitol, a consortium comprising Perennial Real Estate, owned and run by Pua Seck Guan, former CEO of CapitalLand Retail and CapitaMall Trust; Chesham Properties, the private vehicle of Kwee Liong Seen, who controls Pontiac Land; and Top Global. Theirs was the top bid of $250 million for the land, and the plans are grand.

Capitol Building & Stamford House will be restored into a luxury 200 room five star hotel; Capitol Theatre will be turned into an 800 to 1,000 seat cinema cum performance theatre, and the nondescript Capital Centre will be torn down and redeveloped into a 15 storey and residential development. The total cost of the project is likely to be $700 million, according to details released by Perennial Real Estate. A spokeswoman from Perennial declined to reveal the individual shares of the joint venture.

The yr alone, Perennial Real Est has stitched together three deals, including the Capitol redevelopment. In Apr, it announced it had acquired Katong Mall for $248 m and would be spending a further $55 m to upgrade it. In jul, it acquired the retail podium of Chinatown Pt for $250 m. In just 6 mths, Perennial Real Est has managed to accumulate $1.2 b to $1.3 b in assets under management.

No doubt, Perennial Real Est will be able to raise the funds necessary for the Capitol project. But what abt Top Global, the only listed entity among the Perennial Capitol consortium? On opening on Oct 28, its share price tripled to 1.5 cts. Top Global reported a net loss of $7.4 m for the 6 mths to jun 30, compared with a profit of $1.3 m in FY2009, attributed to profits from the completion of Top Residence last yr.

In Sep, the Co announced a three for one rts issue of 8.4 b rts shares, at one cent, with attac hed (five yr) wrts of 8.4 b, convertible intp 8.4 b new shares. That wld cause the no of shares outstanding to balloon frm 2.48 b currently to 10.88 b this yr. The exercise price for the free wrt is half a cent.On Sep 29, the Co announced that 8,078,460,456 rts shares & 8,078,460,456 wrts were alloted, raising $80.78 m. If all the wrts are exercised over their 5 yr lifespan, the co wld raise a further $40 m. Before the rts exercise, the co was already in net cash position, but had a small equity base of $17 m.

Thr rts document stated that 90% of the proceeds wld be used to invest in new business. Since the rts announcement, Top Global has been announcing various investments in commercial paper, which offers a higher yield than fixed deposits, including Russian bank VTB and Glencore Finance. The timing of the Capitol redevelopment is opportune.

I am vested in Top Global. With patience, I believ e that it will be a multiple bagger in the long term giving time to the Mgt of the co. Congrats to all holders of Top Global. God bless.