KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) has entered into agreements to sell its non-core assets in National Exhibition and Convention Centre Sdn Bhd (NECC) and Sepang International Circuit Sdn Bhd (SIC) to the government.

The airport operator said yesterday it had inked the deals for the sale of 162.39 million shares in NECC and 10 million shares in SIC to Minister of Finance, Inc (MoF) for RM159.63 million and RM1 cash, respectively.

MAHB said the proposed non-core disposals would enable it to streamline its businesses and manage its resources more effectively.

It would also be able to focus its efforts towards growth and expansion of airport operations business to improve profitability and generate better return on assets and equity.

The disposals are expected to be completed by the end of financial year 2009.

Under MAHB’s restructuring plan unveiled in February, MAHB will pay the government RM1.01 billion, comprising RM508 million cash and the balance set off against the sale of NECC to the government and capital expenditure projects which include upgrading works at the low-cost carrier terminal and aero-train in KLIA.

The plan also entails the selling of SIC to the government for RM1. The government will also assume its liabilities of about RM121 million.

MAHB also granted the Minister of Finance a call option that requires MAHB’s subsidiary Malaysia Airports Sdn Bhd (MASB) to sell the Sepang International Formula One Circuit to the former at its net book value within 10 years.

SIC has been the main promoter and organiser of the F1 Malaysian Grand Prix since 1999 and in order to finance its obligations as promoter and organiser, SIC has received from MAHB and MASB advances amounting to RM162.8 million and RM183.2 million, respectively.

SIC has repaid approximately RM224.9 million of these advances and as at March 31, 2008, owes MAHB and MASB in aggregate, net advances of RM121.2 million.

MAHB also intends to enter into an agreement with SIC and MASB to regulate the operation, maintenance and the use of the circuit.

For illustrative purposes, the MAHB Group would have recognised an aggregate gain on disposal of about RM5.9 million at group level arising from the disposals if it had been completed in FY08.