Gadang buys land in PJ for RM55.7mil

New high for Dagang NeXchange Bhd

PETALING JAYA: Gadang Holdings Bhd’s indirect unit, Gadang Construction Sdn Bhd, has entered into an agreement with Gabungan AQRS Bhd's unit Nusvista Development Sdn Bhd to buy leasehold commercial land in Damansara Perdana in Petaling Jaya for RM55.7mil cash.

In a filing with Bursa Malaysia, the construction and property development group said it bought the 2.66-acre land for investment due to its strategic location within Damansara Perdana and the likelihood that it would appreciate in value.

“The purchase consideration was arrived at on a willing buyer-willing seller basis after taking into consideration the market value of the land currently owned by Nusvista,” said Gadang, adding that it would use internally generated funds and/or bank borrowings to fund the purchase.

Gadang noted that the land would be bought free from all charges, liens, encumbrances or restraints and with legal possession.

The proposed acquisition is slated for completion within nine months.

While the proposed acquisition would not have any impact on Gadang’s issued, paid-up share capital and net assets, the additional bank borrowings will correspondingly increase the company’s borrowings and gearing level.

“It would expose the group to interest rate and debt-servicing risks, while any utilisation of internal funds is expected to result in a reduction of funds available for working capital purposes, which may have an adverse effect on the group’s cash-flow position,” Gadang noted.

Based on its latest audited consolidated financial statements as at May 31, 2016, Gadang’s borrowings stood at RM222.82mil, which will increase to RM267.37mil post-acquisition. Its gearing ratio will increase from 0.42 times to 0.50 times.

Nevertheless, Gadang said it would manage its cash-flow position and funding requirements prudently to address the risks.