KUALA LUMPUR (March 8): NWP Holdings Bhd said today it is currently facing challenges in its existing wood-based business and thus, its intention to diversify its business direction.

"We found a reputable partner LBS Bina Group Bhd, which owns a project in Zhuhai (China) which is located in a mature area and with a promising development plan. Hence, we proposed to participate in the development jointly with LBS to enhance the income stream and shareholders value of NWP," it said in a filing with Bursa Malaysia today.

NWP was replying to queries by Bursa in relation to its recent announcement that it would jointly undertake redevelopment of the Zhuhai International Circuit (ZIC) in China with LBS.

NWP said the plan is to develop ZIC into a mixed commercial development, comprising commercial, hospitality, retail, leisure and motor sports components and a cultural centre.

"The overall prospect and outlook of the proposed development is expected to be very positive and consequently translate into earnings of NWP in the future.

"(However,) we are unable to ascertain the effects on the earnings per share, net assets per share and gearing [at] this juncture until the final terms and conditions are being finalised and execution of the definitive agreement," said NWP.

Under the deal, LBS will subscribe to 1.1 billion NWP shares or a 73.7% stake for RM93.5 million or 8.5 sen per share to partly fund the development. The ZIC is a joint venture between LBS (60%) and China's state-owned Zhuhai Jiuzhou Holdings Group Co Ltd (40%).

According to NWP, the proposed subscription will increase the number of issued shares of NWP to 1.49 billion shares from 392.25 million shares, while its share capital will increase to RM200.52 million from RM107.02 million.

Upon completion of the proposals, LBS will emerge as a substantial shareholder of NWP.

NWP executive director Wong See Ming will remain as substantial shareholder of the company post the subscription, but with a reduced shareholding of 6.52% from a 24.79% stake currently.

NWP chief executive officer Datuk Seri Kee Soon Ling and its non-independent non-executive director Mak Hon Leong, meanwhile, will cease to be substantial shareholders with 2.56% and 2.14% shareholdings respectively. Kee and Mak currently own 9.74% and 8.16% of NWP shares.

It added that the proposed subscription and proposed diversification are inter-conditional upon each other.

NWP shares closed up 1.5 sen or 6.82% at 23.5 sen today, with 52.74 million shares traded, bringing a market value of RM92.18 million.