KUALA LUMPUR (Sept 6): Loss-making Trive Property Group Bhd, formerly known as Eti Tech Corp Bhd, has proposed to buy out homebuilder Pakadiri Sdn Bhd, which owns a 20.92ha land in Kemaman, Terengganu, for RM19.57 million cash.

The company plans to co-develop the land with state government's Lembaga Tabung Amanah Warisan Negeri Terengganu.

In a filing with Bursa Malaysia today, Trive Property said it was appointed as the contractor for the first phase of the 66.96ha Bandar Baru Kertih Jaya township — with it dubbing Pakadiri's portion the "Kertih Project" — by Pakadiri last year. However, construction works were put on hold as Trive Property's private placement raised less than a third of RM7 million it sought to fund the job.

"The proposed acquisition also represents an opportunity for the group to own the entire interest in the land in a strategic location with growth potential to enhance the gross development value (GDV) of the group's development projects which is expected to provide greater sustainability for the group's future earnings," said Trive Property of its rationale for the exercise.

"In undertaking the proposed acquisition, the company takes into consideration the strategic location of the land at the Eastern Development Corridor and the development prospects in the surrounding vicinity," it added.

Trive Property said it was still finalising the development plans for the Kertih Project, and assessing whether it would make any amendments to the master layout plan for the project that was approved on Sept 8, 1997. With that, it can't ascertain the GDV, cost, and timeline for the project as at writing.

Pakadiri is the registered proprietor of the land that Trive Property plans to develop, said the latter. Located roughly 4km from Kertih Airport, the 20.92ha leasehold land had a market value of RM20 million, according to a July 25 valuation report by independent registered valuer Cheston International (KL) Sdn Bhd.

The cash payment of RM19.57 million will be distributed to the two current shareholders of Pakadiri based on their equity share. Hussin Omar owns 63.4% of the homebuilder, while Hapipah Abd Manaf owns the remaining 36.6%.

Trive Property said it plans to seek financing for half of the cash payment, which theoretically could raise its borrowings by RM9.78 million from RM1.51 million in the first quarter ended April 30, 2016. After deducting the cash in hand, its net borrowings could then be at 0.2 times the shareholders' funds of RM40.97 million.

However, the pro forma effect of the proposed acquisition showed Trive Property planned to use RM1 million from its equity's reserves as part of the internally generated funds' portion to buy Pakadiri.

Trive Property said it expects to complete the acquisition by the fourth quarter of this year.

Its shares ended the day flat at 8.5 sen today, valuing the company at RM102.69 million.