In a filing with Bursa Malaysia, the property developer said it expected to make a gain of RM146.8mil from the proposed sale. This translates into a 32-sen improvement in earnings per share.
SDB said it entered into a conditional agreement on Tuesday to sell the piece of freehold land on Jalan Ampang, along with the four blocks of commercial building on it, to Golden Eagle Realty Sdn Bhd. Golden Eagle is ultimately 99% owned by businessman Tan Sri Koo Yuen Kim.
The 30-year-old Wisma Selangor Dredging has a market value of RM372.1mil (as appraised by an independent valuer as at May 15) and audited net book value of RM318mil (as at March 31 last year).
Two years ago SDB had said it was open to selling Hotel Maya, its property located a stone's throw away from Wisma Selangor Dredging, but did not give any price indication. Hotel Maya's net book value as at March 31, 2016, was RM150mil.
“The proposed disposal (of Wisma Selangor Dredging) provides an opportunity for the SDB group to unlock its investment in the subject property and generate immediate cash flow for the group,” the company said.
Of the RM480mil gross proceeds, the largest portion (RM248.75mil) will be used to fully settle the redemption sum owing to Public Bank Bhd to release the existing lien-holder’s caveat and the bank’s interest over the sale property.
A sum of RM103.07mil will be set aside for the SDB group’s working capital and RM80.96mil will be distributed to shareholders via a special cash dividend.
According to this writer's back-of-the-envelope calculation, the special dividend will be about 19 sen per share based on SDB shares in issue as at March 31, 2016. SDB paid annual dividends ranging from 1.5 sen to 3 sen per share over the last few years.
SDB will also use part of the proceeds - RM19.2mil - to repay bank borrowings, which is expected to result in RM0.96mil in annual interest savings. (SDB has total group borrowings of about RM563.76mil.)
After the proposed disposal, SDB net gearing is expected to fall to 0.05 times compared with 0.33 times as at March 31, 2016.
The counter closed at 96 sen on Tuesday, up 3 sen with 101,200 shares changing hands. SDB share price has gained 17% year-to-date.