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
  • The acquisition will be funded by cash and issuance of new shares
  • The new shares will be issued at a significant premium of 28%
  • The Group’s Integrated Tourism Platform now covers six of Myanmar’s major tourist destinations

 

Singapore, 30 May 2018 – SGX-Catalist listed Memories Group Limited (“Memories Group” or “Company”), a Myanmar-based tourism-focused company, has entered into a sales and purchase agreement with Wa Minn Group of Companies Company Limited (“Wa Minn Group”) and U Kun Naung Myint Wai (“UKNMW”) 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% in the high season (between October and March), and an occupancy rate of 30% 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.

Commenting on the acquisition, Mr. Pun added, “The agreement by the vendor of Kayah Resort to accept new Memories Group’s Shares at a premium is an indication of not only his confidence in the Group but also in its management, strategies and plans in growing to become the leading Myanmar tourism player in the country. It also reflects his positive outlook on the tourism sector in Myanmar as a whole and its continued long-term growth.”

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 day- trips or excursions for Kayah Resort’s guests to explore the Kayah State’s attractions and experience the different local tribal cultures.

Source: Memories Group Press Release

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