The share prices of companies under Charoen Pokphand (CP) Group, including CP Axtra Plc (CPAXT), fell across the board in morning trade on Monday after the retail and wholesale business operator officially announced investment of nearly 8 billion baht in real estate joint venture Happitat at the Forestias (HATF).
In a filing to the Stock Exchange of Thailand (SET) on Monday, Saowaluck Thithapant, CPAXT's chief wholesales business officer, said the company invested in 95% of the total issued shares of AGP by subscribing to new shares of Axtra Growth Plus Co Ltd (AGP) in cash worth about 7.97 billion baht, with the remaining 5% subscribed to by MQDC Town Corporation.
CPAXT informed the SET on Dec 13 that it had established AGP, a direct subsidiary which would hold 100% of shares in HATF, which is developing a mixed-use real estate project under the name The Happitat.
"The board of directors has approved the company's entry into this joint investment after careful consideration of the appropriateness and value of this joint investment, taking into account the value of the assets of The Happitat Project appraised by property valuers approved by the Securities and Exchange Commission," said Ms Saowaluck, who is also CPAXT's group chief finance accounting and corporate shared services officer.
The board viewed that this investment would be beneficial to CPAXT and would further compliment the mixed-use real estate development business of the firm, while the audit committee did not have any different opinion, she added.
This transaction is not considered to be a connected transaction. The highest transaction size is 1.49% when calculating the transaction size based on the firm's subscription and cash payment for 95% of new shares in AGP for an amount of approximately 7.97 billion baht.
In addition, it will be less than 15% when calculating the transaction size based on such a subscription of shares in AGP in cash together with further investment which is expected to be made by the company in order to complete the development of The Happitat project, Ms Saowaluck said.
"Therefore, this transaction is not regarded as an acquisition or disposal of assets."
AGP, with a registered capital of 8.39 billion baht, becomes a shareholder of the indirect subsidiary HAFT, which has operated a mixed-use real estate business under the project name The Happitat, which comprises three shopping mall buildings.
The entire project of The Happitat is located within the Forestias Project. The transaction was completed on Dec 13.
Shares of CPAXT, which operates retail under the brand Makro, a wholesale business under Lotus's, plunged 15.8% or 5.50 baht before noon to 29.25 baht.
Convenience store operator CP All (CPALL) fell 4.8% to 55.9 baht and Charoen Pokphand Food (CPF) lost 0.83% to 23.8 baht.
Nattawat Onratn, senior executive vice-president of CGS-CIMB Securities (Thailand), said shares of domestic play CP-related stocks fell on Monday as investors do not like the recent investments announced by CPAXT.
"There are lots of enquires about this investment. That's why the share prices dropped even though such stocks are the major beneficiaries of the government's recently announced stimulus measure," he said.
