KUB indirect subsidiaries dispose factory, land for RM44.8 mln

KUB Malaysia Bhd (KUB) indirect subsidiaries, KUB Maju Mill Sdn Bhd (KUBMA) and KUB Sepadu Sdn Bhd (KUBS) are disposing of a factory, ancillary equipment and machinery, as well as a 60-hectare leasehold land for RM44.8 million to Sinong Pelita Oil Mill Sdn Bhd (SPOM).

In a filing to Bursa Malaysia, KUB said KUBMA and KUBS had entered into sale and purchase agreements with Sinong Pelita for the disposal.

KUBMA is the owner of the factory sited on part of the land to be sold by KUBS, which is the registered proprietor of an estate located in Oya-Dalat Land District, Mukah, Sarawak, of which the land is part of.

The factory, which has a net book value (NBV) of RM45.59 million as at Dec 31, 2018, is currently encumbered via a debenture for banking facilities provided to KUBMA by a local bank. The estimated NBV of the land including bearer plants as at Dec 31, 2018 was RM169,858.

The land is planted with oil palm and produced about 1,826 tonnes of fresh fruit bunches between 2016 and 2018.

On rationale for the disposal, KUB said the sale of the factory would enable the company to eliminate its underperforming assets and reduce cash outflow and deterioration of financial performance.

“KUBMA will be able to reduce its debts and interest expense significantly and the sale of the land will enable KUBS to monetise the assets at better value since the price offered by SPOM is commercially attractive,” it added.

The disposal would also improve KUB’s gearing ratio to 0.30 times from 0.44 times, based on the group’s latest financial results as at March 31, 2019.

KUBMA plans to utilise the proceeds to settle its bank borrowings and reduce other debts, whilst the proceeds to KUBS will be used for operational requirements. — Bernama