KUALA LUMPUR: The Malaysian Chinese Association (MCA) has closed the deal on the Menara Multi Purpose for RM375 million, just in time to celebrate the purchase with its delegates at its AGM this weekend.
In an announcement to Bursa Malaysia on Monday, Sept 26, Multi-Purpose Holdings Bhd (MPHB) said it has disposed of Menara Multi Purpose together with 414 car park bays free from encumbrances. The company is expected to gain RM199.6 million from this disposal and will use the proceeds to repay its borrowings.
"The proposed disposal forms part of the group's asset rationalisation exercise to dispose of its non-core assets. The proposed disposal is expected to improve the gearing of the group as the sale proceeds will be utilised to pay down the company's bank borrowings," MPHB noted.
After the proposed disposal, MPHB's net asset will improve to RM2.02 from RM1.88 as at April 28, 2011 while net gearing will improve to 0.88 times from 1.1 times in the same period.
MPHB's original investment in the property amounted to RM289.02 million while it was last valued in April 2011 by Henry Butcher Malaysia Sdn Bhd at RM384 million. The net book value of the property as at Dec 31, 2010 is at RM175.3 million.
The 17-year-old freehold building has 99.07% occupancy with monthly rental income of RM2.09 million (gross rental per month ranges from RM4.25 per sq ft for upper floors to RM10.95 psf for lower floors), which will allow MCA to earn a steady recurring income.
The Edge had on Aug 15 reported that MCA was keen to acquire the 43-storey grade-A office block, which is located near Kuala Lumpur's Jalan Dang Wangi. A source had revealed that the parties were in talks and the purchase price ranged from RM350 million to RM400 million.
With regular dividend from Star Publications (M) Bhd, MCA would be able to finance the acquisition. Star's dividend has been no less than 20 sen since FY2002 ended Dec 31. FY2010 was the record dividend payment year when Star declared 63.1 sen dividend per share.
Being the largest shareholder of Star, Huaren Holdings Sdn Bhd, the investment arm of MCA, had been the main beneficiary of the generous dividend payment. Calculations based on the dividend returns over the years show that Huaren received about RM373 million in dividends form Star between 1997 and 2009.
Last November, shortly before the special dividend payment at month-end, Huaren ceased to be the major shareholder of Star. Filings with Bursa Malaysia showed that Huaren had disposed of 313.3 million shares or 42.4% stake in Star to MCA on Nov 4, 2010.
With the share purchase, MCA's portion of dividends declared by Star last year would amount to RM126 million.
According to MPHB, MCA is expected to make payment in two tranches of RM87.5 million and RM250 million within 30 and 90 days respectively of the sale and purchase agreement (SPA) date on Monday. Payment of RM7.5 million and RM30 million will be paid earlier as earnest deposit and upon the execution of the SPA respectively.
The proposed disposal is expected to conclude by year-end.
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