KUALA LUMPUR (Oct 19): MMAG Holdings Bhd is buying a piece of land together with buildings in Penang from Dynaciate Group Bhd, formerly known as Tatt Giap Group Bhd, for RM41 million to expand its logistics business.

In a bourse filing, MMAG said its wholly-owned unit Line Clear Express and Logistics Sdn Bhd will re-develop the land as part of plans to set up a regional hub and warehouse in Penang.

“Currently, Line Clear only has two branches/depots in Penang which are located in rented shoplots in Bayan Lepas and Bukit Mertajam.

"The proposed acquisition provides an opportunity for the group to acquire and own two parcels of contiguous freehold land with a land area of approximately 549,925 sq ft (which is approximately 2.7 times more spacious than Line Clear’s current warehouse-cum-office at Subang Jaya), located at Kawasan Perusahaan Valdor which is sited off/parallel to the North-South Highway,” the group said.

The buildings which current occupy the land will be refurbished, and upon competition would increase warehouse and storage land area to 1.28 million sq ft, from the current 726,097 sq ft for its peninsular Malaysia clients.

In a separate filing, Dynaciate said it will be using the proceeds from the sale for working capital requirements and future acquisitions.

The land had previously been used for its steel manufacturing and trading operations, and given current depressed steel prices, the land was left unoccupied with the group locating to and renting a smaller production facility elsewhere.

“The board is of the view that the Proposed Disposal represents an opportunity for the Group to unlock and realise the value of the property. The proceeds from the Proposed Disposal can be used by the Group to fund its construction segment which still requires substantial funding to complete its ongoing and future projects for various Construction Works,” Dynaciate said.

Shares in MMAG closed unchanged at 38 sen yesterday, giving it a market capitalisation of RM271.22 million. Dynaciate shares also closed unchanged at 7.5 sen, valuing the company at RM36.01 million.

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