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AISB sells factory lands for RM69.5 mil cash

KUALA LUMPUR (Aug 26): Amalgamated Industrial Steel Bhd (AISB), a mild steel pipes manufacturer, is disposing of its leasehold factory lands at Shah Alam for RM69.5 million to repay bank borrowings and for future business development.

In a filing with Bursa Malaysia today, AISB said it has entered into a sale and purchase agreement with Daikin Malaysia Sdn Bhd to dispose of two parcels of adjoining contiguous detached industrial land measuring 40,514.01 sq metres (10.01 acres), and the buildings constructed on it.

AISB said the proposed disposal provides an avenue for it to unlock and realise the value of these lands.

Upon completion of the disposal, AISB is expected to have a net gain of about RM17.19 million.

"The immediate crystallisation of the value of the property, through the proposed disposal, will improve AISB's operating cash flow and strengthen its financial standing," the group said.

"The proposed utilisation of proceeds to retire all the bank borrowings will pare down AISB's total outstanding borrowings to reduce finance cost and gearing level with the remaining balance to fund ongoing working capital requirement as well as to invest in various property projects currently being explored and seek potential investment," it added.

AISB plans to allocate RM22 million for repayment of bank borrowings, RM32 million for future developments or investments, RM10 million as working capital, RM3.5 million for real properties gains tax, and the remaining for the expenses of the proposed disposal.

The group's gearing ratio as at Dec 31, 2015 (FY15) stood at 0.26 times, and AISB intends to reduce it to zero after the disposal.

The proposal requires shareholders' approval through an extraordinary general meeting, and AISB estimates to complete the disposal by June 2017.

AISB also said it is in the midst of diversifying its business operation to broaden revenue stream by venturing into property development business.

AISB's share price went up by one sen or 2.08% to 49 sen at 2.17pm today, giving it a market capitalisation of RM61.29 million. — theedgemarkets.com

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