SDB shares up on news of HQ sale
Counter rises 12.5% to RM1.08
PETALING JAYA: Shares in property developer Selangor Dredging Bhd (SDB) rose 12.5% to RM1.08 yesterday, on the back of news that SDB was selling its headquarters Wisma Selangor Dredging for RM480mil cash.
Apart from making a profit of RM146.8mil from the proposed sale that would increase the company’s earnings per share by 32 sen, SDB shareholders would also receive a special cash dividend, as SDB said it intended to distribute RM80.96mil of the proceeds to its shareholders. This translates to a special dividend of 19 sen per share.
According to a Bursa Malaysia filing on Monday, SDB had entered into a conditional sale and purchase agreement to sell Wisma Selangor Dredging to Golden Eagle Realty Sdn Bhd.
SDB said the divestment of the property would allow the group to unlock its investment in this asset and put SDB on a stronger footing for its business operations.
It will also provide financial flexibility for the group and provide additional funds for working capital.
In an e-mail response, SDB said that after the completion of the sale, it would be renting the premise where its headquarters are currently located for the next three years, at the very least.
Golden Eagle Realty is a wholly-owned subsidiary of Nation Venue Sdn Bhd, which is jointly owned by Tan Sri Koo Yuen Kim and Koo Yoke Ying.
Yuen Kim, who is currently abroad, said he is very positive on the Malaysian economy and the future growth of greater Kuala Lumpur.
He believes “the potential of Klang Valley property is bright and vibrant”.
The deal is expected to be completed within 12 months from the date of signing of the agreement.
The bulk of the proceeds amounting to RM248.75mil will be used to fully settle the redemption sum owing to Public Bank Bhd, to release the bank’s interest over the property.
Meanwhile, RM103.07mil will be used for working capital for SDB and RM19.2mil will be used to repay part of the group’s bank borrowings.
SDB has total borrowings amounting to RM563.76mil and the partial repayment is expected to result in annual interest savings of RM960,000.
The audited net book value of Wisma Selangor Dredging as at March 31, 2016, was RM318mil. It was valued and appraised by Raine & Horne International Zaki & Partners Sdn Bhd on May 15 at RM372.1mil.
The disposal consideration represents a 29% premium over the market value of the property and a 51% premium over the audited net book value.
Going forward, SDB will maintain property development as its core business despite taking up a 20% stake in mining company Webcon Mining Sdn Bhd recently.