Paragon Union to sell Cheras industrial land to D’nonce Technology for RM17.5 mil

• Paragon Union said the disposal provides an opportunity for the group to unlock and realise the value of the property, which it expects to record a net pro forma gain of RM11.97 million.

KUALA LUMPUR (Jan 5): Paragon Union Bhd is selling industrial land in Cheras, Selangor for RM17.5 million to D’nonce Technology Bhd with proceeds from the sale earmarked chiefly for working capital and repayment of bank borrowings.

Paragon Union said the proposed sale of the land, which contains a single-storey detached factory with a three-storey office annexed, is expected to be completed by the second quarter of 2023.

According to the company’s filing with the local exchange, RM8.42 million out of RM17.5 million was earmarked for the company’s working capital, while RM7.2 million will be utilised to repay its bank borrowings.

Based on Paragon Union’s financial report for the third quarter ended Sept 30, 2022 (3QFY2022), its bank borrowings under non-current liabilities stood at RM10.72 million while its bank borrowings under current liabilities amounted to RM7.48 million.

Meanwhile, the company has cash and bank balances of RM1.32 million.

The company has also set aside RM1.15 million for payment of real property gains tax and the remaining RM723,000 for expenses related to the disposal.

Paragon Union said the disposal provides an opportunity for the group to unlock and realise the value of the property, which it expects to record a net pro forma gain of RM11.97 million.

It added that the disposal would improve the group’s financial position as the net pro forma gain will increase the net assets of the group.

Currently, the land is occupied and utilised by Paragon Union for the manufacturing and warehousing of car carpets and automotive components.

The group plans to relocate the existing operations to other manufacturing and warehouse facilities it owns in Taman Cheras Jaya and Semenyih post-disposal, stating that the disposal would not cause any major disruption to its business operations.

TA Securities Holdings Bhd has been appointed by the company as the principal adviser for the proposed disposal, while Laurelcap Sdn Bhd has been appointed by the company as the valuer for the property.

The proposed disposal is subject to the approvals of shareholders at the forthcoming extraordinary general meeting, the state authority of Selangor and relevant authorities.

In a separate filing by D’nonce, the company said the RM17.5 million will be satisfied by internally-generated funds and/or bank borrowings.

“The exact mix of internally-generated funds and/or bank borrowings will be decided by the management at a later date,” D’nonce wrote.

D’nonce added that the proposed acquisition is to cater for its business expansion as its current rented premises have been fully utilised.

On Thursday, shares of Paragon Union settled one sen or 0.55% higher at RM1.84, valuing the group at RM154.25 million.

Meanwhile, shares of D’nonce closed half a sen or 4.55% higher at 11.5 sen, valuing the group at RM49.96 million.