KUALA LUMPUR (June 6): Chin Hin Group Bhd will sell 17 units of three-storey shop offices to Chin Hin Building Materials Supply (JB) Sdn Bhd (CHBMS) for RM21.2 million in a related party transaction.

The properties, located in Rawang and Alor Setar, are not being used for any business operations, Chin Hin said in a filing with Bursa Malaysia.

CHBMS is wholly-owned by PP Chin Hin Realty Sdn Bhd, which is owned by Datuk Seri Chiau Beng Teik (55%), Datuk Seri Wong Mee Leng (15%) and Chiau Haw Choon (30%).

The three are also major shareholders of Chin Hin with Beng Teik being the founder of the group and its current deputy group executive chairman.

Chin Hin said the disposal will provide an avenue for the group to realise its investment in the non-core assets at their market value and raise cash proceeds which can be channeled towards the group’s business operations.

About RM15 million or 70.9% of the proceeds will be used to repay borrowings, with RM14 million to reduce the bankers’ acceptance from Maybank Islamic Bhd and RM1 million to repay the revolving credit by Al Rajhi Banking and Investment Corporation (M) Bhd.

“The proposed repayment is expected to result in annual interest savings of approximately RM0.61 million based on the interest rate of 4% per annum for the bankers’ acceptance and 5.4% for the revolving credit,” the group said.

Another RM4.95 million of the proceeds is expected to be used for working capital within 12 months, with the remaining RM1.2 million for the estimated expenses for the proposed disposal.

Chin Hin said its net gearing will be reduced to 0.93 times from 0.96 times following the disposal of properties and repayment for borrowings.

Chin Hin’s share price rose two sen or 2.6% to 79 sen today, with about 3.26 million shares traded, giving it a market capitalisation of RM436.8 million.