E&O to launch property projects worth RM4b

Property development group Eastern & Oriental Bhd (E&O) plans to launch RM4 billion worth of property projects in the next three to four years, its managing director Datuk Terry Tham said today.

Out of the RM4 billion, property development worth RM2 billion will be carried out in the Klang Valley and remainder in Penang, he told reporters after the group's extraordinary general meeting (EGM) in Kuala Lumpur.

Despite the current economic crisis, Tham said the group did not face any overhang problem in its projects.

"Fortunately, all the projects that we launched received very good response with 90 percent local buyers," he said.

Low interest rate has attracted buyers with high income to invest in high-end properties at prime locations, he added.
At the EGM, E&O shareholders approved its proposed RM200 million renounceable rights issue of irredeemable convertible secured loan stocks.

According to Tham, the right issue will position the group on a solid footing to consolidate its earning drivers.

The right issue proceeds may also be used to fund strategic acquisitions for expansion purposes and to capitalise on opportunities that arise in the next economic upturn as well as towards working capital and repayment of financial obligations, he said.

E&O executive director Eric Chan said besides right issue, the group also planned to raise RM300 million via internal sources by disposing its inventories and non-strategic landbanks as well as cash generated from property development activities.

The fund-raising activities were part of the group's effort to address the current economic downturn in order to enhance its cash reserve and lower its gearing ratio, he said.

It is understood the fund-raising effort will reduce the group's net gearing to 0.16 times within 18 months from 0.79 times as at March 31, 2009. - Bernama