PETALING JAYA: Boustead Holdings Bhd has entered into a sale and purchase agreement with Singapore’s Hotel Royal Ltd to dispose of Royale Chulan Bukit Bintang Hotel for a total cash consideration of RM197mil.
The proposed sale is expected to be completed by mid-2019.
In a press release yesterday, a Boustead spokesperson said the disposal of this property forms part of the Boustead Group’s overall plan to return to profitability by way of divesting non-strategic assets.
“Weighing the prospects of maintaining the hotel, given low occupancy rates and the age of the property coupled with the increasingly competitive industry, the sale offers greater value to the group.
“The prime location of Royale Chulan Bukit Bintang Hotel in the golden triangle of Kuala Lumpur enables us to dispose of the hotel at a premium over the net book value.”
The group is expected to realise a total estimated gain of RM92mil upon completion of the proposed disposal, translating into approximately 4.5 sen per share.
According to a Bursa Malaysia filing, Boustead intends to use RM184mil of the disposal consideration to repay part of its bank borrowings by the third quarter of 2019.
The remaining RM13mil of the disposal consideration will be used to pay expenses in relation to the proposed disposal such as real property gains tax and professional fees.
The sale consideration was reached on a willing-buyer willing-seller basis, factoring in the fair market value of the property based on an independent professional valuation.