KUALA LUMPUR, Dec 22 — Global Oriental Bhd (GOB) has proposed to sell 51% stake in its wholly-owned unit, Penaga Pesona Sdn Bhd (PPSB), to Batu Kawan Development Sdn Bhd for RM41 million cash.
In a filing to Bursa Malaysia Tuesday, GOB said, given the challenging business condition, the proposed sale represented an opportunity to divest the loss-making unit and re-direct the resources to other development projects and investments.
“The move will also eliminate exposure to further potential losses which might be incurred by PPSB,” it said.
GOB said the unit has been suffering losses since its acquisition in 2007 except for financial years 2012 and 2013.
It said the recent entry of major market players into Batu Kawan’s property market, coupled with current weak market sentiments, had created intense competition and significant challenges for marketing the company’s future development projects in Mainland Penang.
“The expected earnings arising from the proposed sale is approximately RM43.24 million, after taking into account the gain on sale net of tax and the reversal of post-acquisition losses of PPSB.
“Accordingly, the net asset position of GOB Group would be increased by approximately RM43.24 million,” it said.
The proposed sale was expected to reduce the gearing position of GOB Group from 0.58 time to 0.49 time upon the repayment of bank borrowings of RM15.50 million, it said.