Sim Leisure says IPO has enabled it to be debt free

Singapore

CATALIST-LISTED theme park operator Sim Leisure Group has reiterated that it does not expect business to take a hit from how it spent its initial public offering (IPO) proceeds.

The board said on Monday that there will not be any material adverse impact on business operations and plans, even if the proceeds went to redeem certain preference shares and to pay for listing expenses, and not towards expansion and working capital.

The full redemption of Penang Development Corp's redeemable convertible preference shares has improved Sim Leisure's financial position, which "is expected to augur well for the group's operations", the board added in its latest statement.

It said that Penang-based Sim Leisure, which made its trading debut in Singapore on March 1, now no longer has any debt on its balance sheet besides hire-purchase borrowings of less than RM100,000 (S$33,200). The group can also save on finance costs, the board asserted.

The board reiterated that Sim Leisure plans to expand in Asean and China through joint ventures and strategic alliances, and expects to pay for its business strategies and expansion plans "using internal resources and/or external financing".

It added that it "does not foresee any difficulties with implementing the growth strategies of the group, by leveraging the scalable and proven profitable business model" of its parks, and expects visitor numbers to rise.

The board was replying to an opinion piece by corporate governance hawk Mak Yuen Teen, published by The Business Times on March 6.

He had pointed to the difference in the actual IPO size and group founder and chief executive Sim Choo Kheng's previous target, shared with the media, of between US$10 million and US$12 million, and asked "how realistic are its touted plans of expanding ... taking into account the kind of theme parks it was operating".

Sim Leisure rose 0.2 Singapore cent, or 1.08 per cent, to 18.8 Singapore cents, before its statement. The counter is down by 14.6 per cent from its IPO price of S$0.22 a share.