KUALA LUMPUR: Shareholders of Benalec Holdings Bhd voted overwhelmingly in favour of the disposal of three parcels of land valued at RM96.95 million to companies that one of its executive director and a major shareholder have interests in.
According to an announcement by Bursa Malaysia yesterday, 99.78% of the shareholders voted in favour of the three resolutions for the disposal of the land parcels at an EGM.
The land parcels measuring a total of 79.49 acres (31.8ha) are located in the mixed development areas of Kota Shah Bandar and Taman Kota Laksamana in Melaka.
The companies acquiring the tracts are Oceancove Development Sdn Bhd, Strategic Property Sdn Bhd and Oceanfront Development Sdn Bhd. Datuk Leaw Tua Choon, an executive director of Benalec, has interests in all three companies.
According to a circular to shareholders, the land tracts were collectively valued at RM86.57 million or RM25 per sq ft (psf) by a valuer in a valuation exercise carried out in December last year.
“The disposal is 12% or RM10.38 million above the aggregate value accorded by the valuer and 60.4% over the latest net book value of the land audited as at June 30, 2012,” the company said in the circular.
However, a group of disgruntled minority shareholders feel that the market value of the land is between RM31 and RM37 psf, considering that the tracts involved have a view of the sea and are located just 2.5km from the commercial centre of Melaka.
“The minority shareholders are not happy and we think the land sale should have been tendered out instead of being sold to a related party,” a minority shareholder told The Edge Financial Daily after the EGM yesterday,
He said a question was raised during the EGM concerning the valuation of the land but “they told us that the land was undervalued because there were no buyers. But that is hard to believe because it is a sea-view land and it should be expensive”.
In its circular to the shareholders, Benalec said it is expected to realise an estimated gain of RM27.37 million after taxation and other costs from the sale of the land.
It said RM29.1 million of the proceeds will be used to repay debts and RM12 million to repay bank borrowings while RM54.9 million will be used for working capital.
“When we asked what the proceeds will be used for, an independent director told us they needed the money to reclaim more land. But the question is, why didn’t the company develop the land instead of selling it?” asked the minority shareholder.
He said as minority shareholders, “we cannot do anything, we cannot stop them, we can only vote against the motion”.
After the disposal of the three parcels of land, Benalec will still have 170.54 acres of reclaimed land with a net book value of RM123.01 million.
The minority shareholder reasoned that Benalec should develop the land and raise its dividends in order to raise the share price.
“Benalec should focus on paying higher dividends,” he said.
He reasoned that if the company gives a dividend of at least 10 sen, the share price would reach as high as RM1.80, adding that if dividend is declared twice during the financial year, it would result in the share price reaching over RM2.
For the nine months ended March 31, 2013, the group posted a lower net profit of RM54.4 million on the back of higher revenue of RM183.9 million. Earnings per share came to 6.8 sen. The group proposed a dividend of three sen for the cumulative nine-month period.
Yesterday, Benalec fell seven sen or 4.6% to RM1.46 from RM1.53 with some 18.8 million shares traded.
This article first appeared in The Edge Financial Daily, on June 12, 2013.
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