This article first appeared in The Edge Malaysia Weekly on August 23, 2021 - August 29, 2021

CONTROLLING shareholders of Avillion Bhd pared down their stakes out of the blue last week, raising the question of who will emerge as the major shareholder of the integrated travel and hotel group.

Avillion managing director See Ah Sing — who, through Mazmur Capital Sdn Bhd, was the largest shareholder of the loss-making hospitality group — started paring his stake on Aug 16, beginning with the disposal of 88.08 million shares. This was followed by another 17.5 million shares on Aug 17, resulting in his equity interest shrinking to 15.07% from 28.91% previously.

See is a close associate of former finance minister Tun Dr Daim Zainuddin.

See, who had been appointed to the board of Avillion (formerly known as Reliance Pacific Bhd) as independent non-executive director in 2014, was reappointed managing director in April 2019 after retiring from the position in September 2017.

See and his wife, Hedy Gan See Tong, are directors and shareholders of Mazmur Capital, which ceased to be a substantial shareholder of Avillion after disposing of 116.6 million shares or a 12.3% stake last Wednesday.

After the disposals, Mazmur Capital is left with 2.75% equity interest.

According to Avillion’s 2020 annual report, as at Sept 2 last year, Mazmur Capital held a controlling stake of 26.28% in the company, or 248.1 million shares, followed by Ibu Kota Developments Sdn Bhd with 26.19% or 237.3 million shares.

The resort operator’s filings with Bursa Malaysia did not specify whether the shares were sold on the open market or otherwise, raising questions as to who acquired the shares and who would emerge as the new majority shareholder of Avillion.

Updated company search data shows that as at Aug 4, Ibu Kota Developments was wholly owned by Daza Holdings Sdn Bhd, the vehicle of Daim’s wife Toh Puan Mahani Idris and son Datuk Md Wira Dani Abdul Daim.

Recall that Mahani’s cessation as a substantial shareholder of Avillion after transferring 247.3 million shares or a 28.8% stake to Maybank Trustees Bhd on July 9, 2019, was only announced on Bursa in February the following year.

The transfer of shares was done via Ibu Kota Developments. It is not clear who Maybank Trustees is holding the stake for.

Nevertheless, Ibu Kota Developments remained as a shareholder with 26.19% equity interest as at Sept 2 last year, as per Avillion’s FY2020 annual report.

Despite the hotel operator’s notable assets — among them Avillion Port Dickson, Avillion Admiral Cove and Admiral Cove Integrated Marina Resort in Port Dickson, Negeri Sembilan; Avillion Cameron Highlands in Pahang; Avillion Villa Cinta in Bali, Indonesia; and Avi Pangkor in Perak — the group has been mired in losses since FY2016, even before the Covid-19 pandemic.

Avillion’s losses deepened from RM18.9 million in FY2018 to RM35.6 million in FY2019, before narrowing to RM22 million in FY2020 and RM13.4 million in FY2021.

For the fourth quarter ended March 31, 2021, the integrated group’s net loss had narrowed to RM1.79 million from RM12.9 million in the previous corresponding period, on the back of RM4 million in revenue from RM12.64 million the year before.

In its Bursa filing, Avillion attributed the lower revenue to the impact of the Movement Control Order (MCO) and Conditional MCO on its business divisions.

“Amid such strong headwinds and challenges, the group will focus on internal rationalisation, optimisation of resources in preparation to ride any such recovery in the coming quarters. We will continue with our asset enhancement and refurbishment programme for some of our hotels and resorts in preparation for the post-pandemic period,” it said.

“The group will continue to add new revenue streams by seeking and securing and adding more hotels to our stable of managed hotels and other income-generating ventures. The short-term prospects and visibility may be dim and blurred but it is our belief that the pent-up demand for tourism, vacations and getaways from the domestic and international markets will bring about better performances in the near future.”

As at March 31, Avillion had cash and bank balances of RM4.3 million and a bank overdraft of RM25.2 million. Meanwhile, short-term borrowings and long-term debt amounted to RM43.9 million and RM53.64 million respectively. The hotelier’s finance costs for the period stood at RM6 million.

On Feb 26 last year, the group announced to Bursa that it had received an unsolicited letter of offer from Guangxi East Hangyang Investment Group, which it said was a “foreign company unknown to Avillion”, to buy certain land owned by the group in Port Dickson for RM382 million. Nothing came out of the offer, which was valid for 30 days.

Meanwhile, Avillion is also undertaking a private placement of up to 20% of its existing share base of 944.4 million shares to raise up to RM22.7 million by issuing 188.88 million shares at 12 sen per placement share, and 566.64 million warrants as a sweetener to be issued at a later date, on the basis of one warrant for every two shares held.

Last week’s shareholding developments at Avillion gave rise to the stock being among the most actively traded counters on the local bourse, with a daily volume of between 110.72 million and 654.40 million shares.

The stock closed at 18 sen last Friday — after rising sharply to 21 sen from 14 sen on Aug 12 — giving the group a market capitalisation of RM189.3 million.

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