Emas Kiara proposes disposal of subsidiaries for new acquisition

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KUALA LUMPUR (Nov 13): Emas Kiara Industries Bhd (EKIB) has proposed to dispose two subsidiaries to raise cash for the acquisition of a property development outfit with project in Johor.

According to EKIB’s filing to Bursa Malaysia today, the company had entered into a conditional share sale agreement with Intan Kuala Lumpur Sdn Bhd, to dispose two wholly-owned subsidiaries, namely Noblecorp Lands Sdn Bhd and Emas Kiara Sdn Bhd (EKSB), for a total of RM48.52 million. The consideration includes settlement of outstanding loan advanced by EKIB to both of these subsidiaries.

Noblecorp owns land in Sabah, while EKSB owns an industrial property in Rawang. The proposed disposals are deemed related party transactions as certain EKIB’s substantial shareholders and directors are deemed interested in Intan Kuala Lumpur.

Meanwhile, with the sale of the two subsidiaries, EKIB’s wholly-owned unit Emas Kiara Properties Sdn Bhd (formerly known as Noblecorp Capital Sdn Bhd) had also entered into conditional share sale agreement with MB Land Sdn Bhd, to acquire the latter’s subsidiary MB Max Sdn Bhd for a cash consideration of RM45 million.

MB Max is the developer of the project known as The Pinnacle Tower in Johor Bahru, comprising a 38-storey, 273 units-service apartment block with a total estimated gross development value of RM264.6 million.

According to EKIB, the proposed acquisition of MB Max comes with a profit guarantee of not less than RM15 million and RM16 million respectively, for financial years ending Dec 31, 2015 and 2016 (FY15 and FY16), whilst aggregate audited profit after tax shall not be less than RM51 million up until FY17.

EKIB expects that MB Max’s project would ultimately provide a total estimated gross development profit of RM99.99 million.

EKIB’s share price fell 2.5 sen or 4.13% to close at 63 sen today, giving it a market capitalisation of RM51.76 million. The stock has almost doubled since the beginning of this year.