SDB selling Wisma Selangor Dredging for RM480m

PETALING JAYA: Selangor Dredging Bhd (SDB) is selling its office building Wisma Selangor Dredging and land on Jalan Ampang, Kuala Lumpur, to Golden Eagle Realty Sdn Bhd for RM480 million.
The group said this is a 20.9% premium to its market value and a 50.9% premium to its net book value as at March 31, 2016.
Wisma Selangor Dredging was completed on Jan 16, 1987 at a cost of RM61.67 million.
In a filing with Bursa Malaysia, the company announced that it yesterday entered into a sale and purchase agreement with Golden Eagle to dispose of the 103,882 sq ft (2.38 acres) site in Kuala Lumpur and the building erected on it consisting of four blocks of commercial buildings and two levels of basement car parks.
The bulk of the proceeds from the disposal amounting to RM248.75 million will be used to settle a redemption sum owed by the group to Public Bank Bhd for the property, while RM80.96 million will go to shareholders via a special cash dividend.
“The proposed disposal provides an opportunity for the SDB Group to unlock its investment in Wisma Selangor Dredging and generate immediate cash flow for the SDB Group,” its board said in the filing.
SDB intends to allot another RM19.2 million to repay some of its bank borrowings, which stand at RM563.76 million. Of this, RM103.06 million will be deployed as working capital for the group, while the rest will be for real property gain tax and to defray estimated expenses pertaining to the disposal.
The board said the disposal will result in interest savings while providing the group with “financial flexibility to secure additional borrowings should new investment and development opportunities arise”.
The disposal will result in a reduction in future revenue and earnings of the group, as it will cease to contribute rental income.
The property contributed RM14.56 million for the financial year ended March 31, representing 31.07% of the audited profit before tax of the SDB Group. However, this will be mitigated by the interest savings of RM13.40 million.
The buyer will pay a deposit of 10% of the total consideration and will have to settle the full amount within three months thereafter.