CHEMICAL Company of Malaysia Bhd is inviting bids for its 70.95-acre factory land in Section 16, Shah Alam, Selangor. The Edge understands that it is seeking RM300 million for the land and will use the proceeds to pare down its borrowings. Another asset identified for sale is a bungalow lot in Bangi, Selangor.
CCM, which is 70.25%-owned by Permodalan Nasional Bhd, had earlier disposed of assets in Sabah and Sarawak and in Medan, Indonesia. The group has a clean slate after selling its loss-making fertiliser business and hopes to return to the black this year.
Three weeks ago, an advertisement appeared in The Edge inviting tenders for a 70.95-acre industrial parcel described as facing Persiaran Selangor and Jalan Asam Jawa 16/15 in Shah Alam. The advert, placed by real estate consultancy firm Rahim & Co, also indicated that the land was ideal for redevelopment and that it was zoned for commercial use.
The closing date for the tender is next month.
When contacted, CCM group managing director Leonard Ariff Abdul Shatar confirms that the group owns the land. “We are exploring all available options with the objective to de-gear CCM Group, including disposing of the said land. However, no decision has been made to date. Any potential sale will be subject to internal and external approvals,” he says.
Apart from the 3.09 million sq ft parcel, Leonard Ariff says CCM also put up for sale by tender a vacant bungalow lot in Bangi last year. A buyer has already been found for it and the group is processing the sale, he adds.
“Based on our unaudited financial year ended Dec 31, 2016 (FY2016) announcement, we have RM297.5 million in value classified as investment properties and assets held for sale,” Leonard Ariff says, adding that these include the said properties in Shah Alam and Bangi.
The parcel in Shah Alam is listed as CCM’s top property by value in its FY2015 annual report. It has a 99-year lease from 1973 to 2072. The net book value of the asset, last valued in December 2015, is RM102.70 million.
Declining to reveal the asking price for the parcel, Leonard Ariff says it is “being marketed for sale as land with redevelopment potential”. The area is said to have a plot ratio of five.
In October 2014, CCM closed its manufacturing plant in Medan and in September 2015, it decided to cease operations at its Shah Alam manufacturing plant, which was officially closed on Nov 30 that year. The group said it was no longer commercially viable to continue to manufacture fertiliser because of the prolonged negative market conditions, five years of reduced demand for ammonium nitrate-based fertiliser as well as changes to the plant’s surroundings.
CCM suffered three consecutive years of losses from FY2014, dragged down by the poor performance of its fertiliser business. Its net loss in FY2016 widened to RM64.8 million from RM62.48 million in FY2015.
In a recent interview with The Edge Financial Daily, Leonard Ariff said the worst was over for CCM and that he expected its fortunes to turn around in FY2017 after having fully exited the fertiliser business in 4QFY2016. The group’s primary objective was to de-gear by reducing its debt in FY2017 and FY2018, he said and added that asset disposal was one way of doing this.
CCM’s 12-month gearing stood at 49.71% in FY2016, compared with 49.71%, 51.42% and 61.44% in FY2015, FY2014 and FY2013 respectively.
Last May, the group sold three pieces of land in Medan and later, two parcels in Kemena district in Bintulu, Sarawak, as well as land owned in the Palm Oil Industrial Cluster in Lahad Datu, Sabah, when it disposed of CCM Agriculture Sdn Bhd.
CCM’s business focus now is pharmaceuticals, chemicals and polymer. In fact, it is retrofitting its property in Glenmarie, Shah Alam, to make it the first oncology facility in Malaysia. It will also be building warehouses in Klang and Bangi.
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