PETALING JAYA: Boustead Holdings Bhd (BHB) is disposing of its Royale Chulan Bukit Bintang Hotel located along Jalan Bukit Bintang for RM197 million cash.
The group’s subsidiary Boustead Hotels & Resorts Sdn Bhd has entered into a sale and purchase agreement with Every Room A Home Sdn Bhd, a subsidiary of Hotel Royal Ltd, for the proposed disposal, it said in a statement today.
The sale consideration was reached on a willing-buyer willing-seller basis, factoring in the fair market value of the property based on an independent professional valuation.
The group is expected to realise a total estimated gain of RM92 million upon completion of the proposed disposal, translating into approximately 4.5 sen per share.
A spokesperson from BHB said the disposal of this property forms part of the Boustead Group’s overall plan to return to profitability by way of divesting non-strategic assets.
“Weighing the prospects of maintaining the hotel, given low occupancy rates and the age of the property coupled with the increasingly competitive industry, the sale offers greater value to the group.”
“The prime location of Royale Chulan Bukit Bintang Hotel in the golden triangle of Kuala Lumpur enables us to dispose of the hotel at a premium over the net book value.
“This is indeed an attractive opportunity to enhance value for shareholders which resonates well with our business strategy,” he added.
The proposed sale is expected to be completed by mid-2019.
In a separate filing, Boustead Heavy Industries Corp Bhd (BHIC) said the government has agreed to revise the contract price between its associate company Boustead Naval Shipyard Sdn Bhd and the Defence Ministry, for the supply of four units of Littoral Mission Ship in collaboration with a Partner Shipyard in China.
BHIC said the four vessels will be built and delivered in China at a revised contract price of RM1.05 billion, from RM1.17 billion previously.
The changes will have no material effect on the earnings of BHIC Group for the financial year ending Dec 31, 2019 and its future earnings, it added.