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Memories Group expands Myanmar tourism portfolio by acquisition of Kayah Resort

Kayah Resort located in Loikaw, Kayah State, is a 26-key boutique hotel set to be repositioned as an upscale resort under Memories Group’s Keinnara brand. The deal is the second acquisition for the Group since its listing on SGX-Catalist in January 2018.

SINGAPORE – SGX-Catalist listed Memories Group Limited, a Myanmar-based tourism-focused company, has entered into a sales and purchase agreement with Wa Minn Group of Companies Company Limited and U Kun Naung Myint Wai to acquire Kayah Resort for a purchase price of US$2.9 million. The vendors are not related to the directors, chief executive officer or controlling shareholders of the Company and their respective associates.

Kayah Resort is a 26-key boutique hotel located in Loikaw, Kayah State, just a 10-minute drive from Loikaw Airport and an hour’s flight from Yangon. Kayah Resort boasts 24 bungalows and two executive suites with modern facilities and services such as a swimming pool, restaurant, bar, function hall and airport transfers.

The well-located Kayah Resort enjoys an occupancy rate of 60%(1) in the high season (between October and March), and an occupancy rate of 30%(1) in the low season (between April and September). Its gross operating profit was approximately US$220,0002 for the nine-month period ended 31 December 2017.

Mr. Serge Pun, Executive Chairman of Memories Group commented, “It’s a great pleasure for me to announce Memories Group’s second acquisition of an ideally-located tourism asset since our Singapore listing in January. Our acquisition is well timed and we expect the rebranding and planned improvements to improve Kayah Resort including driving its occupancy rate. From hot-air balloons to luxury resorts and yachting, I’m proud to say our fast-growing integrated tourism platform now has a presence in six of Myanmar’s most visited tourist destinations namely Loikaw, Hpa-An, Bagan, Inle Lake, the Mergui Archipelago and Yangon.”

The Group intends to upgrade and enhance Kayah Resort’s facilities and reposition it as an upscale resort under the Group’s four-star Keinnara brand. Consequently, room rates are expected to be revised to generate better yield for its investment. The purchase price of US$2.9 million represents an 11x multiplier on the hotel’s forecasted average operating profit across FY2019 to FY2021.

The purchase will be funded by a cash consideration of US$1.45 million representing 50% of the purchase price to be paid to the Wa Minn Group (the “Cash Consideration”). The remaining 50% of the purchase price will be funded through the issuance of 7,781,2803 new ordinary shares of the Company (“Shares”) at an issue price of S$0.25 per Share to UKNMW (the “Consideration Shares”). The issue price of S$0.25 per Share represents a 28.2% premium over the weighted average price of the Company’s Shares of S$0.1950 for trades done on the SGX-ST on the preceding market day of the sale and purchase agreement dated 29 May 2018.

Payments of the Cash Consideration and issuance of the Consideration Shares will be made in tranches upon the satisfaction of the prescribed conditions precedent and conditions subsequent. The Company intends to use the proceeds raised from the compliance placement which was completed on 4 January 2018 to fund the Cash Consideration. As at the date of completion, the first tranche4 shall comprise US$725,000 in cash (being 50% of the Cash Consideration) and 3,890,640 new Shares (being 50% of the Consideration Shares) which shall be allotted and issued within one month from the date of completion. The Company will rely on the general share issue mandate obtained at the extraordinary general meeting held on 18 December 2017 for the issuance of the Consideration Shares.

It will also be making an application to the SGX-ST through its Sponsor for the listing of and quotation for the Consideration Shares on Catalist. The Company will make the relevant announcement upon receipt of the listing and quotation notice from the SGX-ST.

U Kun Naung Myint Wai, Chairman of the Wa Minn Group further commented, “We are delighted to be part of Memories Group through this transaction as we view its corporate values and growth plan to be highly promising.”

Kayah State in eastern Myanmar is home to many distinctive tribal cultures, but the most internationally known is the Kayan, whose ‘long-necked’ women have a tradition of wearing metal coils around their necks. Aside from immersion in the different local cultures, Kayah State offers pristine nature, lush landscapes, scenic hikes and an ‘off the beaten track’ experience to tourists. Another popular attraction is the Kyet Cave in Loikaw, the third longest cave in Myanmar5, with an estimated length of 2.2km. Memories Group will also look into enhancing the visitor experience by offering daytrips or excursions for Kayah Resort’s guests to explore the Kayah State’s attractions and experience the different local tribal cultures.

 

  1. Based on internally generated data
  2. Based on internally generated data and exchange rate of 1 US$: 1,342.01 MMK
  3. The number of Consideration Shares is computed based on S$1,945,320 (being US$1.45 million at the agreed exchange rate of US$1:S$1.3416) at the issue price of S$0.25 per Share. The Consideration Shares represent approximately 2.21% of the existing issued share capital of the Company of 351,307,182 shares and 2.17% of the enlarged share capital of the Company of 359,088,462 Shares after the issuance and allotment of the Consideration Shares, respectively.
  4. The second tranche shall comprise US$580,000 in cash (being 40% of the Cash Consideration) and 3,890,640 new Shares (being the remaining 50% of the Consideration Shares) which shall be allotted and issued within one month from the date of satisfaction of the initial conditions subsequent. The final tranche shall comprise US$145,000 in cash (being the remaining 10% of the Cash Consideration) upon satisfaction of the final conditions subsequent.
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Tatiana is the news co-ordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes to monitor the hundrends of news sources of TravelDailyNews Media Network and skim the most important according to our strategy. She holds a Bachelor degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.

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