KUALA LUMPUR (June 18): Malayan United Industries Bhd (MUI) (KL:MUIIND) has secured a term loan facility of up to £152.5 million (RM912.16 million) from CF Hyde Park LP to refinance its existing term loan facility of its Corus Hyde Park Hotel in London, UK.  

The facility will also be used to finance the renovation and refurbishment of the hotel into an upper-scale four-star international hotel brand, said MUI in a bourse filing on Tuesday.

The term loan was secured by MUI's unit London Vista Hotel Ltd.

The bulk or £87.3 million of the loan will be used to refinance its existing term loan facility. Another £38 million is set to be used to refinance the hotel’s redevelopment.

MUI expects the hotel's redevelopment to contribute positively to the group’s future earnings, as it foresees “a substantial increase” in average room rate and occupancy levels to above 80% following the redevelopment plan. The hotel’s occupancy rate stood at 60% in its FY2023 ended June 30, 2023, up from 39% in FY2022.  

It will also set aside £22.7 million from the loan to refinance the hotel’s working capital and £4.5 million to finance cost overruns, if any.

The latest term loan facility is expected to increase the group’s gearing ratio to 1.11 times for FY2025 from 0.71 times, as its borrowings will increase by RM423.7 million. This is expected to incur an additional interest expense of RM82.6 million for FY2025.

As at March 31, 2024, the group had total borrowings of RM837.84 million, of which RM600.64 million were short-term borrowings. The bulk of them were in pounds, at £84.03 million (RM500.85 million). It also had lease liabilities totalling £11.28 million (RM67.26 million).  

MUI's share price closed 0.5 sen or 6.7% lower at seven sen on Tuesday, bringing the group a market capitalisation of RM226 million.