KUALA LUMPUR (May 18): Minho (M) Bhd, which provides kiln drying services, has proposed to acquire a 5.02-acre of industrial land in Kapar, Klang for RM19.6 million, as it seeks to expand its timber storage facilities. 

Minho said its wholly-owned unit Victory Enterprise Sdn Bhd had signed a sales and purchase agreement with Preferred Plot Sdn Bhd to buy the said industrial land, which is adjacent to its existing factory. 

“It is very suitable for the expansion of timber storage facilities of Victory Enterprise, as it will save cost on the transportation of timber and [is] also easier to manage,” Minho said in a filing with Bursa Malaysia today. 

“In addition, it already has recurring income in the form of rental that subsidizes partly, the monthly payment for the loan,” Minho added. 

Currently, Minho said part of the land, measuring 3.5 acres, is rented to Hanson Quarry Products Sdn Bhd for three years, with an option to renew for another six years. 

As for the land price tag, Minho said it was arrived at based on a “willing-buyer, willing-seller” basis, and no valuation was carried out on the land. 

Based on the perimeter of 5.02 acres or 222,705.31 sq ft, the land price works out to be RM88 per sq ft. 

“The purchase consideration will be satisfied entirely in cash, which will be funded by internally-generated funds and bank borrowings,” Minho said. As at end-2017, Minho’s cash and equivalents stood at RM36.5 million. 

In justifying the land purchase, Minho said its directors are of the opinion that the acquisition is in the best and long term interests of the company, as well as its shareholders. 

“The acquisition is fair, reasonable and is not detrimental to the interest of the minority shareholders,” Minho added. 

Minho shares were not traded, since the opening bell of the local bourse today. 

The Main Market-listed counter was last traded at 44 sen, valuing it at a market capitalisation of RM96.67 million.