KUALA LUMPUR: Benalec Holdings Bhd struck two land sale deals in less than two weeks.
The land reclamation firm announced yesterday it has entered into a conditional sale and purchase agreement to sell 22 parcels of land, measuring 128.52 acres (52ha), in Melaka to Ultra Harmony Development Sdn Bhd (UHDSB) for RM235.1 million cash.
UDHSB is a property developer, with Kwok Hong Wai holding 51% direct shares.
In a filing with Bursa Malaysia yesterday, the group revealed that the net book value of the disposal lands upon reclamation is estimated to be about RM157.15 million. Benalec is expected to realise an estimated gain of RM58.49 million after tax, which translates into a gain of seven sen per share.
Last Wednesday, Benalec through its subsidiary Strategic Land Sdn Bhd (SLSB) announced the sale of 9.31ha in Melaka to Teobros Development Sdn Bhd for RM48.1 million cash. The tract was previously sold at RM28.1 million through a controversial related-party transaction but it fell through.
On the latest land deal, Benalec said that the rationale for disposing of the land was to raise funds to repay its outstanding debt as well as finance its ongoing and future reclamation projects.
“The proposed land disposal is in line with the group’s business model to dispose of the reclaimed land received from reclamation projects in Melaka which involve settlement in kind or cash in a timely manner either through disposals or joint ventures,” said the group in a statement.
By disposing of the land, Benalec will be able to immediately crystallise the value of its landbank, which will improve the operating cash flow as well as meet the working capital requirements in the future, it added.
The land was valued by Messrs Jones Lang Wootton for RM224 million using the comparison approach and residual method.
“The disposal consideration represents a premium of RM77.98 million or 49.62% over the estimated net book value of the disposal lands (upon reclamation) and a premium of RM11.13 million or 4.97% over the preliminary valuation of RM224 million accorded by the valuer,” the group added.
This article first appeared in The Edge Financial Daily, on March 21, 2014.
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