Ivory to sell Penang land for RM150 million

PETALING JAYA: Ivory Properties Group Bhd proposes to dispose of a piece of land in Penang measuring 217,771 sq m to Jesselton Peak Sdn Bhd for RM150 million cash.
In a filing with the stock exchange, Ivory said the gross proceeds from the disposal will be used mainly for repayment of borrowings (RM40 million or 26.67%), working capital (RM104 million or 69.33%) and to defray estimated expenses in relation to the exercise.
“The proposed disposal enables Ivory group to realise and unlock the value of the property, which is not generating any income for the group presently, at a discounted price to market value ascribed by the valuer. The purchase price is at a discount of about 6.25% as the property is without development approval or approved layout plan from the local authority as at the date of valuation,” Ivory said.
Upon completion, the proposed disposal is expected to result in a net gain of RM38 million representing about 8.53 sen per ordinary share based on Ivory’s weighted average issued and paid up share capital.
The disposal will see Ivory improve its operating cash flow and strengthen its financial standing. Its plan to use about RM40 million of the proceeds to retire bank borrowing from CIMB will pare down the group’s total borrowings and reduce its gearing level.
“Also, the proposed disposal is an avenue to generate cash flows to fund general operations and future development projects, to seek other potential investment and facilitate any expansion plan for its current business activities,” Ivory added.
The RM38 million net gain will be recognised, upon completion in December 2016, in the financial year ending March 31, 2017.
The exercise is subject to the approvals of shareholders at an EGM to be convened and the application for land access.
Barring any unforeseen circumstances and subject to the fulfillment of all conditions precedent, the board expects the proposed disposal to be completed by December 2016.
Ivory is recommending that shareholders vote in favour of the resolution at the coming EGM.