Encorp to sell Penang land to Selangor Dredging unit
PETALING JAYA: Encorp Bhd proposes to dispose of a plot of freehold land in Batu Feringgi, Penang, to Crescent Consortium Sdn Bhd for RM25 million cash.
In a filing with Bursa Malaysia yesterday, Encorp said it has entered into a sale and purchase agreement (SPA) with Crescent Consortium, a unit under Selangor Dredging Bhd.
“The proposed disposal enables Encorp to unlock its capital from being tied up in long-term assets and to translate it into cash resources for working capital purpose and also to improve the cash flow position of the group,” it said.
The land measures 5.83 acres and is currently vacant. The proposed usage of the land is for residential development.
Based on the audited consolidated financial statements of Encorp as at Dec 31, 2015, the net book value of the land is RM16.12 million, while the related development expenditure is RM6.65 million.
Its market value as appraised by C H Williams Talhar & Wong Sdn Bhd on Aug 10, 2016 is RM20 million.
The original cost of investment on the land was RM16.12 million.
Encorp said the RM25 million disposal consideration is above the net book value of the land and its related development expenditure, with an estimated gain on disposal of RM2.24 million or 0.8 sen per share.
After the proposed disposal, net debt will be reduced to RM233.09 million from RM258.09 million as at Dec 31, 2015 while the gearing ratio will be reduced to 0.36 from 0.39 as at end-2015.
Encorp expects to complete the proposed disposal in the first quarter of 2017.