KUALA LUMPUR (April 27): Encorp Bhd plans to dispose of a block of office suites in Encorp Strand, Sungai Buloh, to Koperasi Permodalan Felda Malaysia Bhd (KPFM) for RM27 million in a bid to raise funds for working capital and improve cash flow position.

Encorp said it has entered into a sale and purchase agreement (SPA) with KPFM, an investment holding company, to dispose of 20 leasehold office suites known as Block P within Garden Office @ Encorp Strand commercial development.

"The proposed disposal enables Encorp to unlock its capital from being tied up in long-term assets and to translate Encorp's non-core assets into cash resources for working capital purpose and also to improve the cash flow position of the group," it said.

The net book value of the property is RM35.45 million based on the audited consolidated financial statements of Encorp as at Dec 31, 2014 while the market value of RM27 million was appraised by Rahim and Co Chartered Surveyors Sdn Bhd through its valuation report dated Oct 16, 2015.

Encorp acquired the property for RM18.47 million on Nov 25, 2010.

"The RM27 million will be used to repay the redemption sum of approximately RM13 million, to defray estimated costs and expenses related to the proposed disposal amounting to RM1.5 million.

"RM12.5 million will be utilised as general working capital and future investment for Encorp group. The timeframe for full utilisation of the disposal consideration is expected to be within (the) next 12 months," Encorp said.

It added that after taking into consideration the audited carrying value of the property of RM35.45 million, the proposed disposal is expected to result in a loss on disposal of RM8.45 million or approximately three sen per share for the financial year ended Dec 31, 2015.

Barring any unforeseen circumstances and subject to the fulfilment of all the conditions as set out in the SPA, the proposed disposal is expected to be completed in the third quarter of year 2016.

Encorp closed unchanged at 72 sen for a market capitalisation of RM200.3 million.