Two holders of AMZ Holdings convertible loan stock want to partially redeem their holding and obtain £1.6m in cash in October.
The convertible loan holders have the right to ask for their money back 18 months after the issue of the convertible. In a note back in January 2009, Evolution claimed that it was unlikely that any redemption would happen in October but things have changed. AMZ is seeking new capital to pay this and provide working capital and management is confident that it will be able to do this.
The redemption will take place on 24 October 2009 and there will be £3.4m of 12.9% convertible loan stock 2011 left in issue. The conversion rate is 150p a share.
AMZ is the largest private landholder on Penghu Island, Taiwan. The 26.6 acres of land was bought from 287 different sellers over eight years. A local referendum will be held on 26 September in order for the population of Penghu to vote on the legalisation of gambling. If there is a positive vote, this will be the first step in establishing a gaming resort on the island.
AMZ has permission to construct a five-star resort and it is likely to seek partners and/or sell on the land. It would be easy enough for a large gaming company to buy a company the size of AMZ.
At 133p a share, AMZ is valued at £21.4m. The NAV was £3.9m at the end of November 2008, including fixed assets of £6.45m.
The land assets have been valued by CB Richard Ellis (Hong Kong) at $46.2m, even without any uplift from the construction of a casino and resort. That would mean that, allowing for the convertibles and other liabilities, AMZ is trading at a discount to its underlying value. There is potential for further upside on top of this valuation but only if AMZ is successful in getting a casino built and operating.
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