PETALING JAYA: Dutch Lady Milk Industries Bhd (DLMI) on Wednesday entered into a conditional sale and purchase agreement (SPA) with UEM Land Bhd to dispose of its current factory land together with buildings in Section 13, Petaling Jaya, for RM200 million.
The buildings are currently occupied by DLMI for its factory operations and will continue to be occupied by DLMI as a tenant following the completion of the SPA.
The use of the gross cash proceeds of RM200 million will be reviewed and determined by the board by the end 2021, and may be utilised to finance the construction of its manufacturing facilities in Bandar Enstek.
DLMI has completed the purchase of three parcels of freehold industrial land in Bandar Baru Enstek, Negri Sembilan, for RM56.79 million cash.
The company will, from 2021, begin constructing manufacturing and warehousing facilities, support facilities and office facilities. It is planned for construction of the new facilities to be completed in three years.
“It is an express condition of the proposed disposal that DLMI will be granted a tenancy of the property for two years from the completion of the SPA (with an option to extend for two further terms of six months each thereafter). DLMI will continue its manufacturing activities on the property until the construction of the new facilities have been completed and the new facilities are fully operational.
“Following the disposal of the property, DLMI will continue its manufacturing activities on the property as a tenant until the new facilities are fully ready. DLMI will then fully operate from the new facilities,“ DLMI said in a stock exchange filing.
The proposed disposal is expected to result in a total net gain of RM178.6 million. This will translate into an increase in earnings per share by 279 sen.
The proposed transaction is subject to the approval of DLMI’s shareholders and is expected to be completed by the end of 2021.