Focus Malaysia, 1 March 2014 - Tan cashing in on assets

Focus Malaysia, 1 March 2014

He used to be referred to as the younger brother of Berjaya Group tycoon Tan Sri Vincent Tan Chee Yioun and was accustomed to playing second fiddle. But Tan Sri Danny Tan Chee Sing, who recently turned 59, has become his own man. Today he oversees a fairly large listed property group and owns more than a hundred private companies involved in a wide range of businesses that include property, construction, the medical centre sector, clubs, steel, hotels as well as food and beverage.

His Tropicana Corporation Bhd (previously Dijaya Corp Bhd), has serveral landmark developments in the Klang Valley, Johor andPenang, while Tan personally owns several tracts of valuable land in the central business district of Kuala Lumpur and other prime areas.

What is interesting about Tan is that he also has a cash cow in the form of private clubs with gaming slot machines. This can daily bring a substantial amount of cash to his coffers.

But despite this, industry players say Tan is considering the disposal of many pieces of private property as well as other businesses to raise cash. As for Tan’s listed Tropicana, it has been on a selling spree after it embarked on aggressive land acquisitions in the past three years, driving the company into a high gearing. Tan himself injected his private properties, worth around RM11bil, into the company in a share-and-cash deal.

In September last year, he sprang another surprise when he injected his 308.4ha in Johor into Singapore-listed Albedo Ltd in (RTO) - a move that raised possible conflict of interest issues. Two months later, Albedo agreed to buy another six parcels of land from Tan, including a prime waterfront commercial site in Johor called Lido Waterfront, doubling the size of the RTO deal to S$1.86 bil.

Tan's decision to sell his private assets to raise cash is puzzling, as Forbes magazine has listed him among the 50 richest Malaysians with a wealth of US$1.15 bil (RM3.8 bil). He also sold his entire stake in cellphone operator U Mobile last year.

Tropicana's ongoing developments in South Johor include Tropicana Danga Bay, an integrated waterfront city; Capri Residences, six luxury towers within Tropicana Danga Bay; and Oasis Tropicana Danga Cove, a commercial development.

The gross development value of Tropicana Danga Bay, including Capri Residences, is RM3.8 bil while that of Tropicana Danga Cove is RM2.9 bil.

Industry players believe the RTO could give rise to a conflict of interest between Albedo and Tropicana, both of which are controlled by Tan and his children, who set the direction of the companies.

Moreover, Tropicana minorities probably expected Tan to inject his prime assets into Tropicana and not into Albedo, seen as a Tropicana rival as both companies are developing projects in Johor’s Iskandar region.

Tan is vice-chairman of Tropicana, in which he has a combined stake of 71.4%; his son Datuk Dickson Tan is managing director and daughter Diana Tan is a non-executive director.

However, Tan seems unperturbed by the allegations. He allayed fears of a conflict when he assured analysts that Tropicana could be benefit manage its property projects in Iskandar.

For him it is business as usual. "He demanding entrepreneur who gets things done on time. Although he has handed t he reins to a management team that includes his son Datuk Dickson Tan, he is still hands-on," says a source who knows him. Indeed, despite having a serious injury a few years ago, he has bounced back.

Injecting more assets into Tropicana may not be viable given the company had been gearing up following an aggressive asset-acquisition exercise some three years ago.

To address its high debt, the company has been actively disposing of assets and it hopes to sell assets worth a total of RM2.2 bil including Dijaya Plaza, Tropicana City Mall, Tropicana City Office Tower, an en bloc sale of The Residences and W Hotel, and part of the Canal City land in Kota Kemuning.

Some of these assets were considered by CapitaMalls Malaysia Trust (CMMT) last August but it aborted its proposed acquisition of Tropicana City Mall and Tropicana City Office Tower after a month of consideration, as the two parties could not agree on terms.

Tropicana on Aug 23 sent a letter of intent (Lol) to CMMT offering it the opportunity to explore the acquisition of the four-storey shopping mall along with its three basement levels and part of its lower-ground floor comprising.