KPS to dispose of Plaza Perangsang for RM46 mil, proceeds to be used for repayment of borrowings

• In a filing with Bursa Malaysia on Thursday, KPS said the proposed disposal is in line with the group's strategic direction which is to monetise its non-core assets and allow it to utilise the cash for working capital and to pare down its borrowings.

KUALA LUMPUR (Feb 29): Selangor state-controlled Kumpulan Perangsang Selangor Bhd (KPS) is disposing of Plaza Perangsang in Shah Alam, a 36-year old building which the group occupies as its main office, for RM46 million to Perbadanan Kemajuan Negeri Selangor (PKNS).

PKNS is a substantial shareholder of KPS with a 5.52% stake, according to Bloomberg. KPS intends to maintain its office at the 17th floor of the 26-storey building and will enter into a tenancy agreement with PKNS upon completion of the proposed disposal. 

In a filing with Bursa Malaysia on Thursday, KPS said the proposed disposal is in line with the group's strategic direction which is to monetise its non-core assets and allow it to utilise the cash for working capital and to pare down its borrowings.

"Furthermore, a substantial amount of funds is required for capital expenditure in order to refurbish or redevelop the property to a satisfactory condition commensurate with its age," it added.

Of the RM46 million proceeds raised from the disposal, KPS said RM36 million will be utilised for repayment of borrowings, RM9.8 million for working capital, and the remaining RM200,000 is allocated for estimated expenses and tax for the proposed disposal.

"The allocated proceeds for repayment of borrowings are expected to result in profit savings of approximately RM1.94 million per annum computed based on the weighted average profit rate of borrowings at 5.4% per annum as at Dec 31, 2023," KPS said.

As at Dec 31, 2023, KPS's loan and borrowings stood at RM466.35 million, consisting of RM359.24 million in long-term borrowings and RM107.12 million in short-term borrowings.

The disposal is estimated to be completed within the next seven months. 

On Monday, KPS reported that its net profit for the financial year ended Dec 31, 2023 (FY2023) shrank 88% to RM8.72 million from RM73.21 million in the previous year, primarily attributed to lower contribution from the manufacturing business, as a result of weaker consumer demand in the electrical and electronics sector.

Besides that, the group also faced foreign exchange losses and higher finance costs, as well as a lower share of profit from its associates.

Annual revenue stood at RM1.23 billion, down 9.7% from RM1.36 billion in FY2022.

KPS' share price inched up half a sen or 0.68% to close at 74.5 sen on Thursday, giving it a market capitalisation of RM400.35 million. The stock has fallen 5.7% year to date.

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