See Hup sells land in Penang to Tek Seng for RM46.96m cash

See Hup sells land in Penang to Tek Seng for RM46.96m cash
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KUALA LUMPUR (Jan 14): See Hup Consolidated Bhd is selling nine plots of land in Penang measuring 853,863 sq ft in total for RM46.96 million cash to Tek Seng Holdings Bhd and a vehicle controlled by the latter’s executive chairman and managing director.

In a bourse filing, See Hup said the proposed disposal is expected to generate a pro forma gain of RM28.05 million. The market value of the property is RM45.20 million, as appraised by C H Williams.

The transportation and logistics company announced that its wholly-owned subsidiary Limsa Ekuiti Sdn Bhd had entered into a conditional sale and purchase agreement (SPA) with Tek Seng's subsidiary Wangsaga Industries Bhd and Tek Seng Properties & Development Sdn Bhd for the parcel of industrial land. 

Tek Seng Properties & Development is a vehicle evenly split between Tek Seng executive chairman Loh Kok Beng and his brother Loh Kok Cheng, who is also managing director at Tek Seng. 

On the disposal’s rationale, See Hup noted that the market value of the property has appreciated in recent years and noted that the sale is part of its plans to monetise its investment in property assets.

The proposed disposal will give rise to approximately RM46.96 million in proceeds, of which RM36.9 million has been earmarked for working capital and/or expansion of the group’s business while RM5.60 million will be used to partially repay its bank borrowings and result in annual interest savings of RM0.27 million. 

Following the disposal, See Hup’s borrowings is expected to decline to RM35.05 million, from RM40.65 million as at March 31, 2020. Its gearing ratio would also fall to 0.34 times, from 0.54 times.

“In addition, the proposed disposal will also allow the group to reinvest the proceeds for its operations and expansion of its core businesses as and when such opportunities arise. The group will consequently be better positioned to grow its businesses and maximise returns to its shareholders,” it noted.  

The disposal is subject to shareholder approval at an extraordinary general meeting.

“The board, having considered all aspects of the proposed disposal including but not limited to the rationale and benefits of the proposed disposal, the salient terms of the SPA and the effects of the proposed disposal, is of the opinion that the proposed disposal is in the best interests of the company,” See Hup added.

Affin Hwang Investment Bank Bhd is the principal adviser for the proposed disposal. 

The disposal is expected to be completed in the second quarter of 2021.

See Hup shares finished the trading day unchanged at RM1.05, valuing it at RM84.45 million. It saw 2,000 shares done. As for Tek Seng, it finished 1.39% or a sen lower at 71 sen apiece, valuing it at RM256.07 million. Tek Seng saw 1.18 million shares done.

Joyce Goh