E&O to sell off assets worth RM134 million

Posted on July 29, 2011 09:14 PM

Eastern & Oriental Bhd (E&O) is transferring a building and the freehold land of 27,744 sq metres located in Penang to Soaring Profit Sdn Bhd for RM134 million cash. Both land and building are part of the E&O Group’s 240-acre Phase One of the Seri Tanjung Pinang mixed development project.

The land was acquired by The E&O Group in May 2004 for RM13.6 million while the construction cost of the building, incurred from March 2009 to May 2011, was RM54.2 million. On March 31, 2010, the carrying amount of both the land and building was about RM19.22 million, based on the audited consolidated financial statements of E&O.

The amount of RM7.6 million per annum is cost for the rental receivable from the building, which has about 269,418 sq ft of gross floor area and 1,042 carpark bays. Proceeds from the disposal of the land and building will be utilised for working capital or repayment of bank borrowings.

The annual savings in interest is expected to be about RM6.55 million (based on an average interest rate of 5% per annum) for the entire proceeds from the disposal of the land and building utilised to pare down borrowings.

E&O Group in its statement said: “The disposal of the land and building is in line with its strategy of preserving capital value and strengthening the balance sheet via realising cash resources which can then be deployed in other projects and investments to maximise returns, or for repayment of borrowings.”

The transaction is expected to be completed by the first quarter of 2012.[Rufaidah]