FPI to sell Sungai Petani industrial property for RM22.1m, expects RM10.9m gain

PETALING JAYA (Aug 28): Formosa Prosonic Industries Bhd (FPI) is proposing to dispose of its lease interest in an industrial property in Sungai Petani, Kedah, to Yetta Steel Industries Sdn Bhd for RM22.1 million cash, as the group consolidates its manufacturing operations in Port Klang.

FPI expects to realise a one-off net gain after tax of about RM10.9 million from the proposed disposal, according to a Bursa Malaysia filing on Friday (Aug 28).

FPI is principally involved in the manufacture of audio products.

The group said the Sungai Petani facility, which has been operational since 2000, primarily supported production for deliveries in the northern region.

FPI has since streamlined most of its production and manufacturing output from Sungai Petani to its main production facility in Port Klang as part of efforts to reduce excess capacity and improve efficiency.

With no further plans to use the Sungai Petani facility, FPI said the property will increasingly become idle and excess to capacity. The disposal would allow the group to unlock the property's value while concentrating its production and management resources at a single location.

RM16.25 mil for working capital

FPI intends to allocate RM16.25 million of the proceeds for working capital and RM5.3 million for relocation costs. Another RM120,000 is earmarked for disposal-related expenses and RM430,775 for estimated real property gains tax.

The relocation costs include retrenchment benefits for employees who are unwilling or unable to relocate to Port Klang, as well as costs to clear and clean the Sungai Petani facility and relocate machinery, stock, fixtures and fittings.

The property comprises a 39,370 sq m, or about 9.73-acre, industrial site at Plot 236, 238 and 240, Jalan PKNK 2, Kawasan Perusahaan Sungai Petani, together with factory, office, warehouse and other buildings.

The RM22.1 million disposal consideration was arrived at on a willing-buyer willing-seller basis and represents a 15% premium over the property's estimated market value, according to FPI. The company acquired its beneficial and equitable interest in the property for RM15 million in 2015.

Perbadanan Kemajuan Negeri Kedah (PKNK) is the registered and beneficial proprietor of the freehold land, while FPI's wholly-owned subsidiary Formosa Prosonic Technics Sdn Bhd (FPT) remains the registered lessee of the land and registered owner of the industrial buildings.

FPT holds the property as a bare trustee for FPI.

The proposed disposal is conditional on FPI and FPT obtaining PKNK's written consent within two months from the sale and purchase agreement dated Aug 28, unless the parties agree in writing to extend the period.

Yetta Steel, formerly known as Yet Ta Industries Sdn Bhd, is involved in the manufacture and sale of metal parts, sheets, steel rod bars, hardware and building materials, as well as transport agency activities.

The proposed disposal does not require FPI shareholders' approval and, barring unforeseen circumstances, is expected to be completed by the first quarter of 2027.

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