KUALA LUMPUR: Mulpha Land Bhd plans to significantly reduce its bank borrowings by RM4 million through the disposal of land in Klang, for a cash consideration of RM8.63 million.

Mulpha Land had entered into a sale and purchase agreement with Amazing Acres Sdn Bhd, for the disposal of two pieces of vacant freehold land measuring 5.1664ha which is located in Mukim of Kapar, Klang in Selangor.

“Part of the proceeds from the proposed disposal will be utilised towards the repayment of MLB group’s bank borrowings, which will result in a reduction of MLB’s gearing level and in turn reduce the borrowing costs which will translate into interest savings for MLB group,” it said in a filing with Bursa Malaysia yesterday.

The proposed disposal will enable Mulpha Land to unlock the value of its landbank and free up its capital which is tied up in the lands, as it has no present intention to develop the land, the company added.

It noted that the deal is also expected to increase the net assets and net assets per share of the group, and reduce its gearing for the financial year ending Dec 3, this year.

Based on the sale consideration, Mulpha Land is expected to make a gain before tax of RM3.97 million after deducting an incidental cost of RM187,504.08 relating to the proposed disposal, while the remaining RM4.44 million will be used as working capital.

It expects to repay the bank borrowings within three months.

 

This article first appeared in The Edge Financial Daily, on September 11, 2013.

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