BCorp sells land in Selangor for RM743m

KUALA LUMPUR: Berjaya Corp Bhd (BCorp) is disposing of 15 parcels of land totalling 10,726.17 acres (4,047ha) together with a palm oil mill in Selangor to Tagar Properties Sdn Bhd for RM743 million or RM70,000 per acre cash. The proceeds will be used to repay borrowings and as working capital.

Tagar Properties is a private limited company principally involved in forest plantation with an authorised share capital of RM400,000. Tee Lip Teng and Tee Chain Yee are its only two directors and shareholders.

The expected net gain of some RM147.4 million to BCorp from the proposed disposal will translate into earnings per share of 2.96 sen, based on BCorp shares in issue with voting rights and mandatorily convertible securities as at Aug 8, 2014 of 4.98 billion.

The land, located near Rawang and Kuala Selangor and just off the west side of the North-South Highway, has been mostly used to cultivate oil palm.

As of June 2014, some 4,300ha have been planted with oil palm trees with varying maturity profiles of two years to more than 25 years. The planted areas have consistently produced around 68,000 tonnes in fresh fruit bunches.

“The proposed disposal represents an opportunity for BCorp to unlock a substantial portion of the value of the said land. The proceeds will be utilised to repay its borrowings and for working capital purposes,” said the group in a filing with Bursa Malaysia yesterday.

It said its wholly-owned subsidiary Berjaya City Sdn Bhd (BCity) yesterday signed a conditional sale and purchase agreement with Tagar Properties for the proposed disposal of the lands which were acquired in 1995. On completion of the exercise, the balance of the land to be held by BCity will be reduced to 2,597.40 acres.

BCorp said the land was originally bought by BCity for RM391.5 million and as at April 2013, their carrying value was RM507.8 million.

The current sale price of RM743 million or RM70,000 per acre is said to have been arrived at on a “willing-buyer-willing-seller” basis after taking into account factors such as the lands’ earnings potential and open market valuations. The price represents a slight discount of 1.7% or RM13 million to the market value.

BCorp said the sale is expected to be completed in the second half of 2015, and that it will have no material effect on the net assets and gearing of the group for the current financial year ending April 30, 2015.

This article first appeared in The Edge Financial Daily, on August 12, 2014.