PETALING JAYA: Bonia Corp Bhd has entered into a conditional share sale agreement with its major shareholder and group executive chairman Chiang Sang Sem for the 100% equity interest in Maha Asia Capital Sdn Bhd for RM2.49mil.
The proposed disposal is deemed a related party transaction in view of the interest of Chiang, who owns some 46.81% of Bonia.
Presently, Maha Asia is a wholly-owned subsidiary of Bonia. The issued and paid up share capital of Maha Asia is RM500,000 divided into 500,000 ordinary shares of RM1.00 each.
Maha Asia is principally a property investment company, where its principal asset is a freehold land measuring 1,403.74 sq m together with a single-storey bungalow in Jalan Delima, Kuala Lumpur. It is currently used as a car park.
The market value price of the Maha Asia Property is RM26mil, is above its market value of RM24mil. The net book value of Maha Asia is RM21mil, while the original investment cost was RM19.9mil.
Bonia said that as stated in the valuation report, the Maha Asia Property is designated for mixed use development with a permissible plot ratio of 1:4:0.
As at May 4, the directors of Maha Asia are Datuk Sri Chiang Fong Tat and Chong Chin Look.
Bonia said that the purchase price for the sale shares payable in cash shall be RM2.49mil.
On the completion date of this proposed disposal, Chiang shall also pay to Bonia the amount due to Bonia by Maha Asia. The amount as at March 31 amounted to RM12.5mil.
Based on this proposed disposal, Bonia shall receive proceeds of some RM15mil, which will be used for repayment of bank borrowings.
Bonia said that the proposed disposal will enable Bonia to divest Maha Asia Property at a premium to the market value and realise a net gain on disposal of approximately RM4.82 mil.
“At the same time, Bonia will also receive an estimated RM15mil cash inflow, which will enable Bonia to pare down its bank borrowing and reduce its gearing,” it said.
Bonia’s gearing level will drop to 0.3 times (x) from 0.33 times while total borrowings will drop from RM142.83mil to RM129.18mil. The disposal is expected to be completed within 7 months from this announcement.
Upon completion of the proposed disposal, Maha Asia shall cease to be a subsidiary of Bonia and hence, its earnings shall no longer be consolidated into the Bonia Group.