18 Nov 2009
TA Enterprise sees hotel earnings tripling
KUALA LUMPUR: TA ENTERPRISE BHD []'s (TAE) hotel sector earnings are expected to triple in the financial year ending Jan 31, 2011 (FY11) from FY09, on the back of its acquisitions over the past 12 months, including the four-star hotel Swissotel Merchant Court Singapore (Swissotel).
In FY09, hospitality operations contributed revenues of RM76.6 million (17.4%) and pre-tax profit of RM15.8 million (11.5%) to TAE's property division, TA Global Bhd, which will be making its debut on Bursa Malaysia on Monday.
TAE will hold a 58.7% stake in the listed TA Global, enabling it to equity-account for the division's earnings.
Only one hotel property, Radisson Plaza in Sydney, Australia, which began operations in July 2000, has been contributing to TAE's hotel sector earnings.
The acquisition of Westin Melbourne in Australia was only completed in April, while its Aava Whistler hotel near Vancouver, Canada, is officially opening on Nov 26 but is already fully booked for the upcoming Winter Olympics.
Swissotel, whose acquisition for about RM635.8 million cash was approved by TAE shareholders earlier today, is expected to be injected into TA Global soon after its listing, TAE managing director and CEO Datin Alicia Tiah told reporters after the company's EGM.
"That is the next corporate exercise after the listing," Tiah said. This would likely be through the sale of the hotel to TA Global with payment either through cash or shares, she said.
Swissotel was being purchased by TAE and not TA Global as the purchase opportunity came after TAE had submitted TA Global's listing application to the Securities Commission, a company statement said.
TAE expects the Swissotel acquisition, for which it had paid 10% of the purchase price, to be completed by the end of this month.
Meanwhile, Tiah said the TA Group was looking out for hotels and commercial buildings locally and abroad for possible acquisition, perhaps within this financial year.
She said in the purchase of Swissotel, TAE had been given a four-year guarantee of S$19 million (RM46.2 million) in earnings before interest, tax, depreciation and amortisation, translating to a yield of 7.6%.
Swissotel is owned by a Mauritius company, Quayside Gem Ltd, through its Singapore-registered Merchant Quay Pte Ltd. TAE is acquiring the entire equity interest in Quayside Gem from Luxembourg-based LaSalle Asia Opportunity II SARL.
The group has budgeted S$5 million for the next five years to refurbish and upgrade Swissotel's public areas, back-of-house and meeting facilities.
Source: The Edge
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