Thriven explains loss-making land sale

PETALING JAYA: Thriven Global Bhd said its Bukit Tunku land sale, which would result in a RM11.41 million aftertax loss for its 51%-owned subsidiary, was done based on its own feasibility studies and in view of prevailing market conditions.

In reply to a query from Bursa Malaysia yesterday, the company said the sale was done in the best interests of its shareholders.

Thriven said it is fully aware that the sale consideration (RM27.52 million) by Mulpha Argyle Property Sdn Bhd (MAPSB) to Mount Well Sdn Bhd is below both the net book value as at Dec 31, 2016 and the original cost of investment.

“Although the sale of the land will result in a loss after tax of RM11.41 million, the net cash proceeds raised of RM19.85 million will improve the cash flow of Thriven Group and save interest payable on the loans taken from the lenders due to early settlement,” it explained.

Thriven said it is not feasible for MAPSB to take further loans to build six bungalows and for the company to advance more money to MAPSB to kickstart development of the land and to settle the borrowings.

“MAPSB is not optimistic in the prevailing property market conditions with the saleability of the said six units of high-end bungalows within a reasonable period of time. Part of the sale consideration will be utilised to settle the loans taken by MAPSB from the lenders and reduce Thriven Group’s borrowings,” it added.

Thriven said the cost of servicing the debt on the land is RM5.5 million a year, and when the loans taken by the company are settled, the company need not advance any further money to MAPSB and may use the funds saved to support other active projects undertaken by Thriven Group.

“Net cash proceeds raised of RM19.85 million may be utilised for other active projects undertaken by Thriven Group which can deliver better results and profits for Thriven Group. Such profits will enable Thriven to recoup the losses suffered due to the investment in MAPSB,” said Thriven.