KUALA LUMPUR (April 22): Olympia Industries Bhd and DutaLand Bhd have proposed to dispose a 9.01 acres land, which forms part of the Kenny Heights project in Kuala Lumpur to Semanja Hartamas Sdn Bhd, for RM150 million.

In a filing with Bursa Malaysia, Olympia said its unit Olympia Properties Sdn Bhd (OPSB) had entered into a sale and purchase agreement with Semanja for the disposal of the land.

The land forms part of the Kenny Heights development, which is a 58:42 joint venture between KH Estates Sdn Bhd (KHESB) — a wholly-owned unit of DutaLand Bhd, and OPSB — which is wholly-owned by Olympia.
 
Olympia said it acquired the land on April 27, 2007 at RM62 million and the development expenditure incurred on the land amounted to RM34.1 million as at June 30, 2015.

The net book value of the land is RM96.1 million as at June 30, 2015, the filing said.

The sale consideration was arrived at a willing buyer-willing seller basis and based on a valuation carried out by valuer Cheston International (KL) Sdn  Bhd, which pegged the market value of the land at RM150 million.

Olympia said the disposal will allow the group to realise its investment in the land and pare down its borrowings.

The disposal will reduce Olympia’s gearing ratio to 38.7%, from 70.6% at financial year ended June 30, 2014 (FY14).

Olympia said the proposed disposal will result in an estimated gain of RM12.9 million for the group, based on the financial statements of the Kenny Heights joint venture accounts for financial year end June 30, 2015.

It added that the proposed disposal is expected to increase the earnings per share of the company from a loss per share of 0.3 sen as at June 30, 2014 to an earnings per share of 1 sen.

However, the company said based on the agreement between KHESB and OPSB, proceeds derived from the JV will first be utilised and applied towards a redemption sum pertaining to existing charges created against the Kenny Heights project.

“Based on the sale consideration of RM150 million and after deducting the redemption sum (RM99 million), contribution to infrastructure cost (RM10 million), tax (RM9.7 million) and transaction cost (RM3.3 million), the net proceeds raised from the proposed disposal amounting to RM28 million will be accrued to KHESB,” it said.

In a separate filing, DutaLand said it proposed to use the RM28 million proceeds to finance DutaLand group’s development projects amounting to RM25 million, and working capital amounting to RM3 million, of which is expected to be fully utilised within one year upon receipt of payment.

DutaLand group is expected to gain approximately RM17.9 million from the disposal, based on the financial statements of the Kenny Heights Joint Venture accounts for the financial year ended June 30, 2015.

The proposed disposal is expected to contribute positively to the consolidated earnings of DutaLand by 2.1 sen per share for the financial year ending June 30, 2017.

Barring any unforeseen circumstances, the proposed disposal is expected to be completed by end July 2016, the filing stated.

Olympia shares closed half a sen or 5% higher at 10.5 sen today, for a market capitalisation of RM107.46 million. DutaLand shares closed 1 sen or 2.11% lower at 46.5 sen, with a market capitalisation of RM393.45 million.