KUALA LUMPUR, June 16 –– Eastern & Oriental Bhd’s (E&O) subsidiary, Eastern & Oriental Hotel Sdn Bhd, is set to dispose its entire shareholding interest in E&O Express Sdn Bhd (EOE) to Langkawi Saga Shopping Centre Sdn Bhd and Lubritrade Trading Pte Ltd for RM85 million.
In a filing to Bursa Malaysia, E&O said EOE is the legal and beneficial owner of the piece of land in Bandar Batu Feringghi, Penang, on which the Lone Pine Hotel stands.
EOE is currently the owner of the Lone Pine Hotel.
E&O said RM83.857 million of the proceeds from the proposed sale would be used for working capital and repayment of bank borrowings, and the rest for expenses.
As at March 31, 2016, the total bank borrowings of the E&O Group amounted to about RM1.52 billion.
Assuming that proceeds from the proposed sale are utilised to pare down borrowings, the annual savings in interest is expected to be about RM4.6 million based on an average interest rate of about 5.5 per cent per annum, the company explained.
Upon completion of the proposed sale, possibly in October 2017, EOE shall cease to be a subsidiary of E&O.