KUALA LUMPUR (July 13): SKH Consortium Bhd is planning to acquire a 70% stake in property development firm Rimbun Gabungan Sdn Bhd for RM12 million, from a company in which Bina Puri Holdings Bhd's founder Dr Tony Tan Cheng Kiat is a director.

In a stock exchange filing yesterday, SKH said it inked a share sale agreement with Bijak Fajar Sdn Bhd and Newston Development Sdn Bhd for the proposed acquisition.

The directors of Rimbun Gabungan are Tan, David Ng Chee Hwa, Zailan Abdul Ghapar and Heap Wei Guan. Tan is also a director, along with Ng, in Bijak Fajar, which has a 70% stake in Rimbun Gabungan. Meanwhile, Zailan and Heap are directors of Newston, which owns the remaining 30% in Rimbun Gabungan.

Under the agreement, SKH will buy 49% from Bijak Fajar, and 21% from Newston — giving it control of 70% in Rimbun Gabungan.

Rimbun Gabungan is set to receive the rights to develop a piece of government leasehold land in Setapak that has been alienated for affordable housing from its sister company, Rimbun Purnama Sdn Bhd, which was awarded the land last year. The two companies have common shareholders and directors.

Based on an independent valuation in April this year, the market value of the land was set at RM24.52 million. The proposed affordable housing project on the plot, comprising two blocks of residential apartments, will have an estimated gross development value of RM252 million.

SKH said the acquisition will be funded via a combination of internal funds and/or bank borrowings.

"The board believes that property development business would provide another stream of revenue source to complement SKH's existing construction business.

"The proposed development would contribute positively to the future earnings of SKH Group and improve the financial position of SKH Group via additional revenue and earnings contribution from the proposed development," the group said.

Barring any unforeseen circumstances, the proposed acquisition is expected to be completed in the fourth quarter of SKH's financial year ending Mar 31, 2019.

SKH shares closed down 6.7% to 7 sen yesterday, and for a market capitalisation of RM42 million. — theedgemarkets.com

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