KUALA LUMPUR (Oct 2): LBS Bina Group Bhd (LBGB), via its wholly-owned subsidiary Dragon Hill Corp Ltd (DHCL), has acquired the entire equity interest of Lamdeal Investment Ltd (LIL) -- which holds 60% stake in loss-making Zhuhai International Circuit in China, for US$1.

Simultaneously, the management agreement dated April 8, 2004, between DHCL and LIL, has been terminated, LBGB said in an announcement on Bursa today.

“Upon completion of the exercise of option, DHCL shall hold 100% of the entire issued and paid-up share capital of LIL and this would render LIL a wholly-owned subsidiary of the company and accordingly ZICL would be a 60% owned subsidiary of the company.

“The exercise price at US$1 would create a negative goodwill (non-operating profit) of RM2.65 million, thus would be giving an increase in the profit after non-controlling interest of the group for the financial year ending December 31, 2013, by 7.12% as compared to LBGB’s audited financial statements for the year ended 2012," it said.

Based on the latest audited consolidated audited financial statements for the financial year ended December 31, 2012, LIL has profit after non-controlling interest and net liabilities of HKD82.9 million (RM34.60 million) and HKD136.8 million (RM57.10 million), respectively, it added.

LIL together with its joint venture partner in China, has in year 1992 formed a sino-foreign cooperative joint venture entity, known as Zhuhai International Circuit Ltd (ZICL) to jointly develop and operate China’s first professional racing track, a 264-acre circuit.

ZICL is a 60% owned subsidiary of LIL.

LBGB foresees huge potential in the ZIC Circuit land which currently occupies some 264 acres of prime land, it said.

It is strategically located next to the Lakewood Golf Club and the 197-acre development land which have been earmarked for mixed development, it added.

It noted that the decision to bring back ZIC Circuit into LBGB will maintain the group’s presence in Zhuhai, China and may in the future provide another opportunity for the group’s venture into property development.

ZIC Circuit is an FIA (International Motor Sports Federation) approved circuit which has held numerous international motor race events, including BPR Global GT Series, FIA GT Championship, A1 Grant Prix and Intercontinental Le Mans Cup, it noted.

To recap, LBGB in 2002 had acquired LIL as part of the workout proposal of the restructuring of Instangreen Corporation Sdn Bhd (formerly known as Instangreen Corporation Bhd) approved under the Pengurusan Danaharta Nasional Bhd Act 1998.

ZIC Circuit at that time was poorly managed and was making losses.

In view of the uncertainty in this investment, LBGB then devised a safety plan to dispose LIL to third party with an option to repurchase it back at US$1.

Accordingly, DHCL had on April 8, 2004, disposed of its entire equity interest in LIL with an option to repurchase at a consideration of US$1 within a period of 3 years from the date of option agreement (option period).

Simultaneously, DHCL was appointed by the new owner to act as management consultant to manage and carry out the business operation of LIL.

In year 2006, the option period was extended to expire in year 2046.