About Olympia..

Olympia

Dated Dec 2010 …

Olympia, a company under gaming and property magnate Tan Sri Yap Yong Seong, is seeking to put in a RM2.25 billion bid for Pan Malaysian Pools Sdn Bhd (PMP), the gaming arm of Tanjong plc. But the company has not been able to firm up a financing plan which is why it has not submitted an offer yet;

Dated June 2010 …

The proposed sale of Menara Olympia and a neighbouring car park to Jelita Timur Sdn Bhd has been aborted.

Would the company still sell to another buyer at the higher price? After all, it was due to the lower valuation compared with downtown Kuala Lumpur ’s other office buildings that prompted Bursa Securities to ask for a second valuation.

But following the second valuation by Rahim & Co, which valued the property at RM228.1mil, Jelita Timur had informed the board of Olympia of its decision to withdraw from the transaction. A previous valuation in January 2010 by Collier , Jordan Lee & Jaffar Sdn Bhd valued the property at RM202.65mil. This figure was the same as an earlier valuation done in 2008.

Part of the objection to the deal stemmed from the fact that under the sale and purchase agreement drawn up with Jelita Timur, Olympia would end up with just over RM11mil in cash as part of the sale price involved Jelita Timur taking up RM172.5mil in debt that has been charged under Menara Olympia.

Olympia has yet to make any decision following the announcement on the aborted sale. Price was one of the main reasons given by Jelita Timur for aborting the transaction.

Some claim that the proposed sale was due to Olympia badly needing an infusion of capital to kickstart the 88-acre freehold Kenny Heights project, located in Sri Hartamas and which was being jointly developed with sister company DutaLand Bhd.

The project, divided into nine parcels for mixed development over 15 years, has seen the launch of Kenny Heights Estate comprising 49 four-storey town villas on 3.7 acres with a gross development value of RM200mil due for completion early next year.

Late last year the first 38-storey block of Kenny Heights Sanctuary, a four-block condominium phase on nine acres, was launched.

Observers point to Merrill Lynch (Asia Pacific) Ltd’s decision to let a joint venture agreement signed with DutaLand and Olympia for the development of 16.2 acres to lapse and the mutual agreement to terminate another joint venture as being push-factors for the proposed sale.

Another reason to push for the sale could be that Olympia would face lower contribution from the gaming division due to the Government’s imposition of a higher pool betting duty at 8% from 6% previously. This was seen as a negative as Olympia’s Lotteries Corp Sdn Bhd, which operates in Sabah , contributed nearly half of the total revenue to the company for the financial year ended June 30, 2009.

Olympia said in July 2010 that the increase would have an adverse financial impact on the operating performance of the company for the financial year ending June 30, 2011.

However, it refuted those claims. The proposed disposal was part of the company’s obligations to meet scheduled payments under the debt restructuring scheme completed in 2007. Under the scheme, Menara Olympia was pledged to the now defunct Pengurusan Danaharta Nasional Bhd, to which the debt is owed.

The debt restructuring scheme included the disposal of non-core assets, to improve cash flow and raise funds to reduce borrowings in order for the company to concentrate on core business activities of gaming, financial services and business investment. This is purely an Olympia corporate exercise and has nothing to do with DutaLand.

Kenny Heights is a DutaLand-led project with Olympia as a passive investor. Olympia has a 42% stake in the development with the remainder held by DutaLand.

But the views have persisted as both companies are helmed by Tan Sri Yap Yong Seong, popularly known as Duta Yap. Both companies are controlled by him via private vehicle Kenny Heights Development Sdn Bhd, which injected the 88 acres into Olympia and DutaLand following their restructuring.

Yap has seen his fair share of scrapes before, with the recessions of the mid-80s and the 1997 Asian financial crisis among them.

The recent (2008-2009) global economic slowdown has also affected Olympia where the property division saw lower contribution in part due to the completion of the K-Residence condominium project in downtown Kuala Lumpur . The travel/leisure division has also seen lower contributions and so has the financial services division, which is led by brokerage Jupiter Securities Sdn Bhd.

However, it is yet to be known how Yap would play his cards as Olympia ’s latest financial results showed that the company could do with the extra funding.

Paradoxically and despite Olympia refuting claims that the proposed sale of Menara Olympia was not to fund its “passive investment” in Kenny Heights , as observers have pointed out, the key to the survival of the company and of DutaLand, would be that the multi-billion ringgit project takes off and does well.