KUALA LUMPUR: Equine Capital Bhd is selling Wisma KLIH for RM58 million, the bulk of which will go towards the repayment of its bank borrowings and for working capital.
In a filing with Bursa Malaysia yesterday, Equine said its wholly-owned subsidiary Kuala Lumpur Industries Bhd (KLIB) had entered into a sale and purchase agreement (SPA) with Wonderful Vantage Sdn Bhd, a company engaged in property acquisition and development.
The RM58 million price comprises RM48 million for the freehold property and RM10 million for renovation and refurbishment, it said.
Under the SPA, Wonderful Vantage will pay a 5% deposit of RM2.9 million, with the remaining RM55.1 million paid within five months of the date of the SPA or two months from the unconditional date, whichever is later.
Wisma KLIH is a 35-year-old, 14-storey office building which sits on prime land at the junction of Jalan Bukit Bintang and Jalan Sultan Ismail here. The property was inherited from the former Kuala Lumpur Industries Holdings Bhd (KLIH) when Equine undertook a reverse take-over of the then debt-ridden company after the 1997/98 Asian financial crisis.
Equine said RM30.2 million from the proceeds of the disposal would be used to repay a portion of its outstanding loan to reduce gearing and borrowing costs. After the sale of Wisma KLIH, Equine estimates its gearing will be reduced to 0.28 times, compared with 0.48 times as at March 31.
Equine said some RM15.8 million would go towards working capital for its property development activities. The proposed divestment of the non-core asset is part of its efforts to streamline business activities towards property development.
“The financial expenditure to upgrade the property and the maintenance cost will consume considerable resources before the property’s occupancy rate can be improved and generate a meaningful yield to the group,” the company said.
Equine said KLIB had acquired the property on April 24, 1984, for RM22 million, and that Wisma KLIH’s audited net book value as at March 31, was RM38 million as determined by an independent valuer.
Wisma KLIH has a net land area of 646.465 sq m and 5,129 sq m of net lettable area, the company said. The acquisition price works out to about RM1,050 per sq ft based on the net lettable area.
However, the SPA is conditional upon approval from Equine shareholders at a forthcoming EGM to be convened. The proposed sale transaction is also conditional upon the company removing the registry caveat against three of the four plots of land which Wisma KLIH sits on, within three months of the date of the SPA.
This article appeared in The Edge Financial Daily, October 27, 2010.