Country Heights to revamp Palace of Golden Horses

KUALA LUMPUR (Dec 9): Country Heights Holdings Bhd (CHHB) has inked a joint venture agreement with Galaxus Corp Sdn Bhd (Galaxus) and Tan Sri Lee Kim Tiong @ Lee Kim Yew to revamp the management and business of the Palace of the Golden Horses (pictured) in Seri Kembangan, Selangor.

The JV would be carried out via a newly-incorporated company, Stallion Management Sdn Bhd (Stallion), which was incorporated on Oct 23, 2015. Its principal activity is hotel management.

The JV is expected to seek strategic partners to expand the hotel business, raise funds for the expansion of the Hotel business and target on a best effort basis, the securing of at least five additional hotels within Asia, to be managed as part of the business, a filing to the Bursa Malaysia showed.

Under the JV agreement, CHHB will invest RM690,000 in Stallion to acquire 69% of the stakes in the company, while Galaxus will invest RM30,000 for 30% of interest, and the remaining 1% would be subscribed by Lee, who is also the director and major shareholder of CHHB.

CHHB said the investment would be funded through its internally-generated funds.

CHHB said the JV Agreement shall come into effect on Dec 9 and shall be valid for the life of Stallion, unless terminated earlier, as provided in the JV Agreement.

“The JV is in line with the expansion plan of the CHHB Group for its Hotel’s business,” CHHB said.

Galaxus, which was incorporated on April 21, 2006, is principally engage in information technology (IT) related business and will be revised to include hotel management, following execution of the JV Agreement.

According to the JV agreement, the Board shall comprise of a maximum of two directors, of which one member will represent the collective interests of CHHB and Lee, where such appointed proxy shall be the Chairman of the Board; and one member will represent Galaxus.

CHHB said the risks related to the transaction in connection with the JV are typical to any commercial contract. These include breaches or non-performance of JV, or other obligations under the JV Agreement.

“The JV will not have any material effect on the earnings, gearing and net tangible assets of the CHHB Group, for the financial year ending Dec 31, 2015. However, the JV is expected to contribute positively to the future earnings of the CHHB Group,” it added.

Lee, who is an interest party by virtue of his shareholding and directorship in CHHB, and his daughter Lee Cheng Wen, also a director and shareholder of CHHB, would abstain from voting and deliberating on the JV agreement.

CHHB rose 6 sen or 6% to RM1.06 today, for a market capitalisation of RM273.6 million.-- theedgemarkets.com