KUALA LUMPUR (March 28): Titijaya Land Bhd is buying shares of a loss-making privately-owned property company that owns a 27,550 sq m piece of land in Ampang here, for RM9.9 million.
The land is expected to be developed into a mixed residential and commercial project, with gross development value estimated at RM1.5 billion.
In a filing with Bursa Malaysia today, Titijaya said the proposed subscription is in line with the group's growth strategy in expanding its land bank and investing in strategic property development projects in the Klang Valley in order to sustain its business as a property developer.
Titijaya's wholly-owned subsidiary Tulus Lagenda Sdn Bhd has today entered into a shares subscription agreement with BJ Properties Sdn Bhd to subscribe up to 9.9 million new shares, representing 99% of the enlarged issued share capital of the company.
Lim Soo Huen now owns 70% of BJ Properties shares, while the remaining 30% stake is held by Lim Soo Seong.
Upon completion of the subscription, BJ Properties will become an indirect 99%-owned subsidiary of Titijaya. Soo Huen and Soo Seong will each hold not less than 0.5% of BJ Properties shares.
For the financial year ended Aug 31, 2017, BJ Properties recorded a net loss of RM1.06 million and negative shareholder's fund of RM3.07 million.
Titijaya intends to fund the proposed subscription via internal funds and/or bank borrowings.
"The proposed subscription is expected to contribute positively to the earnings of Titijaya in the future when the development of the land commences," the group said.
"Enhancement to the net assets is expected in the future as a result of the future potential profit contribution from the development of the land," it added.
The proposed subscription is not subject to the approval of Titijaya's shareholders.
At 4.30pm, Titijaya shares were down 1.5 sen or 2.78% at 52.5 sen, with 296,100 shares done, bringing a market capitalisation of RM705.71 million. — theedgemarkets.com