BAT sells land, factory in PJ to LGB Properties

PETALING JAYA: British American Tobacco (Malaysia) Bhd (BAT) is selling its factory and land in Petaling Jaya to LGB Properties (M) Sdn Bhd for RM218 million, the proceeds of which may be used for dividends, a capital reduction and/or repay borrowings.
In a filing with Bursa Malaysia yesterday, BAT said its wholly-owned subsidiary Tobacco Importers and Manufacturers Sdn Bhd (TIM) has entered into a conditional sale and purchase agreement (SPA) with LGB Properties for the disposal of the two parcels of leasehold land together with the buildings erected thereon.The proposed disposal was conducted by way of a public tender exercise which was closed on April 29.
The group is expected to see a net gain of RM148.78 million from the deal after taking into account the audited net book value of the property of RM59.21 million as at Dec 31, 2015, estimated expenses to be incurred for the proposed disposal of RM2.17 million and real property gains tax of RM7.83 million.
The group’s retained earnings will also increase to RM552.28 million from RM403.5 million as at Dec 31, 2015 while gearing will be reduced to 0.44 times from 0.56 times.
“The use of the gross cash proceeds of RM218 million will be reviewed and determined by the board in the best interest of the group by the end of 2016, and may be utilised to declare dividends, undertake capital reduction of BAT/TIM and/or repay current revolving credit facilities,” said BAT.
TIM’s factory operations is due to be shut down in the second half of 2017.
LGB Properties is principally a construction company, and a subsidiary of LGB Realty Sdn Bhd.
The two parcels of land measure a total of 53,023.5 square metres with a market value of RM216.8 million while the market value of the offices, factories and warehouses is RM45.7 million.
Part of the land is leased to Tenaga Nasional Bhd for 30 years, expiring on July 18, 2032 for the erection and operation of an electrical sub-station.
The total market value of the property is RM262.5 million as appraised by Messrs DTZ Nawawi Tie Leung Property Consultants Sdn Bhd on April 22.
Under the SPA, LGB Properties will rent the property to TIM for 12 months with an option to extend for two further terms of six months each, from the completion of the SPA at a rental rate of RM1.09 million per month.