The conglomerate told Bursa Malaysia that through indirect unit Hicom Megah Sdn Bhd, it had sold its 90% stake in the six-storey The Verge shopping mall in Singapore for S$285.3mil (RM868.4mil).
That translates into net sale proceeds of S$189.07mil (RM575.4mil) which it plans to use for working capital.
“The proposed disposal is expected to increase the EPS of DRB-Hicom for the financial year ending March 31, 2016 by approximately 22.11 sen,” DRB-Hicom said.
For the preceding financial year, its earnings per share were 15.53 sen, with net profit being RM385.15mil.
Hicom Megah, which owned 90% in Corwin Holding Pte Ltd (the owner of The Verge), and Corwin’s minority shareholders have jointly disposed of the company for S$317mil (RM964.9mil) to Evolutyon Real Estate Investment Holding Pte Ltd on Monday.
DRB-Hicom said The Verge, located at Serangoon Road, had a total net lettable area of about 130,250 sq ft and net book value of SG$140mil (RM426.1mil) as at March 31. There is no claim or lien on the property.
“The proposed disposal allows the DRB-Hicom group to unlock the value of its investment in Corwin based on the current market value of the property,” DRB-Hicom said.
Hicom Megah’s total investment in Corwin from 1997 until this year has been about RM224.94mil.
DRB-Hicom said it would use the sales proceeds to settle the loans due from Corwin to Malayan Banking Bhd (Maybank).
Based on the audited accounts for the financial year ended March 31, the amount owing to Maybank is about S$85.52mil (RM260.25mil).
Based on the average cost of borrowings of about 2.81% per annum, the repayments are expected to result in an annual interest savings of about S$2.40mil (RM7.3mil) for Corwin.
The group's gearing ratio of 0.91 times as at March 31, 2015 is expected to fall to 0.83 times.
The Verge (formerly Tekka Mall) in Singapore's Little India was DRB-Hicom's first property venture overseas.
DRB-Hicom shares closed unchanged on Monday at RM1.20.