KUALA LUMPUR: Building materials maker CHIN HIN GROUP Bhd is selling off its assets in Negri Sembilan, Kedah and the Klang Valley for RM76.45mil to raise cash proceeds which can be channelled towards the group's business operations.
The assets were sold to a company controlled by its substantial shareholder PP Chin Hin Realty (PP CH Realty), which is in turn owned by Chin Hin Group deputy group executive chairman Datuk Seri Chiau Beng Teik and group managing director Chiau Haw Choon.
Chin Hin, in a filing with Bursa Malaysia today, said wholly-owned subsidiary Metex Steel Sdn Bhd entered into a conditional share sale agreement with PP Chin Hin Realty for the disposal of the 100% equity interest in Ace Logistic Sdn Bhd for RM20.8mil.
Ace Logistic owns two semi-detached factories in Nilai and two units of single storey terrace houses in Taman Wira Mas, Kepala Batas.
Metex Steel will continue renting the factories from Ace Logistics after the disposal.
PP Chin Hin Sdn Bhd, which is also a wholly-owned subsidiary of Chin Hin, entered into 35 conditional sale and purchase agreements with Midas Signature Sdn Bhd for the disposal of properties for a total cash consideration of RM55.65mil.
Following the disposal of the properties, PP Chin Hin will enter into 14 tenancy agreements with Midas for tenancies of five units of shop offices in Kuala Lumpur, seven units of shop offices in Alor Star and 89 units of car parks in Kuala Lumpur.
Chin Hin had proposed to utilise RM50mil from the disposal proceeds to repay bank borrowings and RM23.45mil for working capital.
It expects to recognise a one-off net gain of around RM12.36mil and a total net interest savings of RM180,000 per annum.
Chin Hin said it recognises the need for an asset light strategy and to monetise its non-core assets to enhance the group's financial position.
It added that the current building materials distribution industry is challenging amidst uncertainties clouding the construction sector which has impacted the group’s profitability.