KUALA LUMPUR (Oct 21): Construction company Ageson Bhd is selling a piece of industrial land measuring approximately 168 acres in Batang Padang, Perak for a purchase consideration of RM278.78 million.

Ageson’s indirect 75%-owned subsidiary Ageson Holdings Sdn Bhd (AHSB) had on Thursday (Oct 21) entered into a sale and development agreement with China’s Zhejiang Guorong Digital Economy Group Ltd (ZGDEG), according to a bourse filing.

ZGDEG is principally involved in providing digital industrialisation and industrial empowerment for the governmental and enterprise organisations and promoting the optimisation and upgrading of the industrial economic system.

ZGDEG is also involved in several industrial park projects involving planning and building digital and intelligent cities for the Chinese government to improve urban management capabilities and economic growth.

The land is part of a larger 475-acre parcel, for which Menteri Besar Incorporated (MBI) Perak had granted AHSB exclusive development rights to develop.

According to the development rights agreement between AHSB and MBI Perak, AHSB would carry out and complete a mixed development project comprising government agencies and administration units, industrial, commercial and residential at AHSB’s sole discretion on the development land.

Following the sale, AHSB will build approximately 33 industrial lots and necessary infrastructure on the land, subject to the proposed development order to be obtained within six months of the submission date of July 29.

“In line with the company’s strategy to grow the property development segment, the agreement represents a strategic opportunity for AHSB to fully sell the industrial land at the purchase consideration. Barring any unforeseen circumstances, ZGDEG is expected to enter into the SPA [sale and purchase agreement] with AHSB and/or MBI Perak for the purchase of industrial land by ZGDEG at the purchase consideration upon AHSB obtaining the approvals.

“The sale and development would provide the required fundings for AHSB to finance the costs of the construction works via the progress payments from the sales of the industrial lots to ZGDEG which would then enable AHSB to immediately commence the construction works upon AHSB obtaining the approvals,” said Ageson.

Furthermore, this would allow the company to conserve its cash and channel it towards financing its day-to-day operations or pursuing other business opportunities.

Ageson said the exercise will provide additional revenue and income to the company which, in turn, is expected to contribute positively to its future earnings and growth.

It said the exercise will also create synergistic opportunities and benefits to the parties to leverage and tap respective the parties' strength, experience, expertise, and business network.

“Furthermore, with ZGDEG extending and sharing its experience and expertise in construction, the company expects the sale and development to be carried out smoothly. The company expects that the sale and development will pave way for future construction and/or development collaboration projects between both parties,” it noted.

Going forward, the group said the sale and development are expected to increase the group’s revenue and its overall financial performance, adding that it is expected to enhance the company’s shareholders’ value.

Shares of Ageson had fallen half a sen or 5.56% to 8.5 sen as at Thursday’s noon break, giving it a market capitalisation of RM110.38 million.