KUALA LUMPUR (Aug 3): Spring Gallery Bhd is planning to acquire developer Klasik Ikhtiar Sdn Bhd for RM3.5 million cash to tap into a RM144.5 million GDV Perumahan Penjawat Awam 1 Malaysia (PPA1M) project in Sentul.

Spring Gallery announced today that it has entered into a share sale agreement with Annathan A/L Sinivesan and Nurul Shahiza Binti Muhammad Adib to acquire 100,000 shares or a 100% stake in Klasik Ikhtiar.

The loss-making developer was awarded the contract for the PPA1M project from the government on Feb 8 this year, said Spring Gallery. The project has a total gross development value (GDV) of RM144.48 million, on the back of gross development cost of RM126.88 million.

“The board believes that property development business would provide another stream of revenue to complement Spring Gallery’s existing construction business,” said Spring Gallery.

Spring Gallery expects the proposed acquisition to be completed by September this year. The purchase consideration, it added, will be funded either via internally generated funds or proceeds received from the conversion of its irredeemable convertible preference shares, or both.

Klasik Ikhtiar’s financial year ended Dec 31, 2016 (FY16) recorded a loss after tax of RM15.83 million. As at Dec 31, it had net asset of RM57.88 million.

Year-to-date, Spring Gallery has seen two jobs relating to residential development — a RM176 million contract in Johor, and another joint venture in Perak — cancelled in July this year.

On July 27, it inked another RM100.17 million deal to gain the rights to carry out and complete a concept masterplan for a development in Melaka.

At 5pm, shares of Spring Gallery lost 3.5 sen or 5.07% at 65.5 sen, giving it a market capitalisation of RM112.04 million. — theedgemarkets.com

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