KUALA LUMPUR: Shareholders of British American Tobacco (M) Bhd (BAT) have given their nod to the country’s largest tobacco player to dispose of two parcels of land that its factory sits on in Petaling Jaya to LGB Properties (M) Sdn Bhd for RM218mil.
BAT’s disposal, a move to restructure its business to further cut cost in light of falling sales due to high excise duties, was deemed fair, although some shareholders remained leery on its plans and outlook.
After a two-hour long EGM, a shareholder, who requested anonymity, expressed that he was concerned about the company’s plans for the future.
“Yes, we shareholders generally have given our approval for the disposal of the land but valuation wise, I think it wasn’t a fair value.
“It should have been valued higher since the land was purchased over 20 years ago,” he lamented, adding that shareholders wanted a clearer picture on BAT’s plans.
Meanwhile, another shareholder revealed that 99.9% had voted for the disposal, while a minority who held over 3,000 shares rejected it.
“The disposal of land was done in a fair manner as it was perhaps the only option left for BAT to save costs since it is faced with higher operating costs and the battle against illicit cigarettes.
“However, it would have gotten a different view from a developer’s perspective,” he noted.
None of BAT’s top management were available for comment after the EGM.
During the EGM, shareholders had also approved for the proceeds from the proposed disposal to be used for restructuring expenses, monthly rentals for tenancy and cash dividends to shareholders.
BAT had earlier announced that it was winding down its factory in Petaling Jaya and retrenched about 230 workers in a restructuring exercise compelled by falling sales due to high duties and stiff competition from illicit cigarettes.
It later tendered out the property for sale.
On June 8, it inked a conditional sale and purchase agreement with LGB Properties to dispose of the two parcels of land for RM218mil.
According to its circular to shareholders, the proposed disposal is slated for completion by the end of the year and expected to give BAT a net gain of about RM148.78mil, excluding the monthly rental for the building for the initial 12 months.
Both BAT and LGB Properties had agreed on a rental rate of RM1.09mil per month for the 12-month period and subject to another one years’ extension.
It said the disposal was arrived at based on a “willing-buyer willing-seller” basis and was justified after taking into account the highest bid received by way of a public tender.
It said the property was valued on an “as is basis” taking into account the land and buildings component values on its ongoing use as an industrial premises.
According to BAT’s annual report, the 46,905.44-sq-ft factory was purchased and last revalued on Sept 30, 1961 and has a net book value of RM55.34mil at that time.