KUALA LUMPUR (Nov 8): Chin Hin Group Bhd's subsidiaries are selling RM76.45 million worth of real estate assets to major shareholders to raise cash which will be used to repay bank loans and finance the building material distributor's working capital needs.
In a statement with Bursa Malaysia today, Chin Hin said its subsidiaries are selling real estate assets to companies owned by Chin Hin major shareholders Datuk Seri Chiau Beng Teik, Chiau Haw Choon and Datin Seri Wong Mee Leng.
Wong is Beng Teik's spouse and Haw Choon's mother, according to Chin Hin.
"The proposals provide an avenue for the group to unlock the value of its property assets at their market value; and raise cash proceeds which can be channelled towards the group’s business operations. The proposals will also reduce the administrative time and effort required to monitor the properties and will enable the group to focus its resources on its core businesses.
"The proposals will enable the group to part repay its bank borrowings, which will reduce the group’s gearing level and improve the group’s financial position with the enhancement of its current ratio; and improve the group’s cash flow due to the lower interest expense. In view of the capital requirements of the group’s operations and financial obligations, the group recognises the need to pursue an asset light strategy and to monetise its non-core assets to raise additional funds to enhance the group’s financial position," Chin Hin said.
Chin Hin said its wholly-owned subsidiary Metex Steel Sdn Bhd is selling its 100% stake in Ace Logistic Sdn Bhd to PP Chin Hin Realty Sdn Bhd for RM20.8 million.
Ace Logistic owns two semi-detached factories in Nilai, Negeri Sembilan and two single-storey terrace houses at Taman Wira Mas in Kepala Batas, Kedah, according to Chin Hin.
Chin Hin said another wholly-owned subsidiary PP Chin Hin Sdn Bhd is selling shop offices and factories to Midas Signature Sdn Bhd for RM55.65 million.
Chin Hin said the shop offices include properties located along Jalan Kuchai Lama here and at Kedah's Taman Bandar Baru Mergong in Alor Setar. Chin Hin said the factories comprise properties in Shah Alam, Selangor and Taman Bandar Baru Mergong.
According to Chin Hin, Metex had today entered into the conditional share sale agreement with PP Chin Hin Realty for the Ace Logistic disposal, while PP Chin Hin signed 35 conditional sale and purchase agreements (SPA) with Midas for the disposal of the shop offices and factories.
"In conjunction with the proposed disposal of properties (shop offices and factories), PP Chin Hin will enter into 14 tenancy agreements with Midas for the proposed tenancies of five units of shop offices at Kuala Lumpur, seven units of shop offices at Alor Setar, Kedah and 89 units of car parks at Kuala Lumpur. The tenancies will commence on the day, immediately after the completion of the respective properties SPA.
"The proposed tenancy provides the group with certainty that its ongoing business operations will not be disrupted. The proposed tenancy provides for the group to renew the tenancies at the group’s option, which allows the group to continue operating its headquarters at Jalan Kuchai Lama, Kuala Lumpur and its branch offices and warehouse in Alor Setar.
"As for the Nilai factory, the tenancy will only expire in December 2020, with automatic renewal up till December 2023, and the option to renew for further five years, ensuring the group’s wire mesh manufacturing business will not be disrupted," Chin Hin said.
Midas is a wholly-owned subsidiary of Aera Property Group Sdn Bhd, which is is wholly-owned by PP Chin Hin Realty, according to Chin Hin.
Beng Teik and Haw Choon, who are directors and major shareholders of Chin Hin, are also directors and major shareholders of PP Chin Hin Realty, Aera Property and Midas.
"Wong is the spouse of Beng Teik and mother of Haw Choon and she also has substantial indirect shareholdings in Chin Hin, PP Chin Hin Realty, Aera Property and Midas," Chin Hin said.
Source: The Edge Markets