MTD enters sale and leaseback agreement for its two properties for RM175 million

KUALA LUMPUR: MTD Capital Bhd (MTD) on Nov 5 announced its sale and leaseback agreement with Haluan Gigih Sdn Bhd (HGSB) for its two properties in Selayang, Gombak in Selangor and Damansara Heights in Kuala Lumpur for RM70 million and RM105 million, respectively. HGSB is a wholly owned subsidiary of Alloy Consolidated Sdn Bhd, a major shareholder of MTD.

Its freehold property in Selayang, also known as MTD Building, comprises a 14-storey office building with a mezzanine floor and has a total gross built-up area of 236,645 sq ft. The conditional sale and purchase agreement (SPA) comes with a subsequent leaseback for the entire building for a period of 10 years from the completion date of the proposed disposal, with an option to extend a further five years.

The building is currently the corporate office of MTD and its subsidiaries. According to the company’s statement to Bursa, the property includes 0.9-acre development land, which has been approved to be developed as an office building. The net value of the property as of March 31, 2009 is RM48.1 million.

Meanwhile, its property in Damansara Heights, which is also known as Bangunan Shell Malaysia, consists of 12-storey office building with 337 car park bays. The building is leased to Shell Malaysia Trading Sdn Bhd under a nine-year lease agreement, which expires on Sept 15, 2012. A replacement tenant to lease the building after the expiry of the Shell Lease Agreement has yet to be identified. As of March 31 this year, the net value of the property is RM75.2 million.

The total gross proceeds of RM175 million by the group is intended to be utilised for its construction works of South Luzon Expressway in the Philippines, making full settlement of outstanding bank borrowings in relation to Bangunan Shell Malaysia as well as the estimated expenses and real property gains tax in relation to the proposals. The proposals are expected to be completed by 1Q2010.