KUALA LUMPUR (May 31): Tropicana Corp Bhd is in the midst of finalising a deal to sell land in Johor to China-based Tiarn Group.

Tropicana announced to Bursa Malaysia yesterday that its indirect wholly-owned unit Tropicana Desa Mentari Sdn Bhd had entered into a heads of agreement with Terran Property Sdn Bhd.

The announcement said that the deal could be a land sale or the grant of development rights of the land to Terran Property or its related parties. The parcel of the freehold land of about 131.964ha in gross area is in Pulai, Johor Bahru.

Sources close to the matter told The Edge Financial Daily that the piece of land could fetch a price of between RM500 million and RM600 million cash. However, both parties are still in talks to finalise the structure of payment for the land divestment.

Once the details have been ironed out, a definitive agreement would be signed.

Tropicana has been on a divestment spree as part of its efforts to pare down its massive borrowings.

The property developer’s debt reduction efforts have yielded results with its finance cost halved to RM7.8 million in the quarter ended March 31, 2016, from RM14.7 million a year ago.

As at March 31, the group had cash and bank balances of RM775.45 million against its total borrowings of RM1.86 billion, including long-term debts of RM1.09 billion.

Tropicana possesses a land bank of more than 1,600 acres (647.5ha) across Malaysia with a potential gross development value of more than RM50 billion. It plans to launch in excess of RM1.5 billion worth of new projects in FY16.

Tropicana’s share price performance has been flat since the beginning of this year. Yesterday, its shares were unchanged at RM1.02, with a market capitalisation of RM1.46 billion.

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This article first appeared in The Edge Financial Daily, on May 31, 2016. Subscribe to The Edge Financial Daily here.

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