KUCHING: Sinong Pelita Oil Mill Sdn Bhd (SPOM) will buy a factory and plantation land in Oya-Dalat land district, Mukah for about RM44.8 million.
The wholly-owned subsidiary of Sinong Holdings Sdn Bhd will acquire the assets from two units of KUB Malaysia
Bhd (KUB).
SPOM is principally involved in oil palm milling and sales of related products.
KUB said its subsidiaries — KUB Maju Mill Sdn Bhd (KUBMA) and KUB Sepadu Sdn Bhd (KUBS) — have entered into sale and purchase agreements with SPOM for the disposal of the factory, ancillary equipment and machineries for RM43 million, and a plot of leasehold land measuring 60 hectares for RM1.8 million on July 22, 2019.
KUBMA owns the factory located on 20 hectares of the land to be sold by KUBS. The factory’s net book value was about RM45.59 million as at
Dec 31, 2018.
“The factory is currently encumbered via a debenture for banking facilities provided to KUBMA by a local bank,” KUB said in a filing with Bursa Malaysia yesterday.
The land to be sold is part of plantation land measuring 2,432 hectares, with a leasehold title from May 22, 1990 to May 21, 2050. The net book value of the land with bearer plants was RM169,858 as of Dec 31, 2018.
The land was cultivated with oil palms in 1994 and produced some 1,826 tonnes of fresh fruit bunches (FFBs) from 2016-2018. The plantation land is currently charged to the bank.
On the basis and justification for the purchase price of the factory, KUB said this had taken into account the operational status, capacity of the factory and further investments needed while that of the land had taken into account its current land use, age of the oil palms and previous internal valuation which was significantly lower.
“The sale of the factory will enable the company to eliminate its under-performing assets and reduce cash outflow and deterioration of financial performance.
“Additionally, KUBMA will be able to reduce its debts and interest expense significantly,” said KUB.
KUB said the sale of the land would enable KUBS to monetise the assets at better value since the price offered by SPOM is commercially attractive.
In addition, the sale is to facilitate the implementation of the factory’s sale and purchase agreement by KUBMA, in which KUBS has a six percent equity.
According to KUB, the proposed disposals are expected to be completed within 90 days with 30 days extension option with interest of eight percent per annum.
