PETALING JAYA: Hap Seng Consolidated Bhd
has proposed to dispose of its entire equity stake in Richmore Development Sdn Bhd to Gek Poh (Holdings) Sdn Bhd for RM51mil cash.
In a filing with Bursa Malaysia, the diversified group stated the stake is held by its wholly-owned subsidiaries Hap Seng Hospitality Sdn Bhd and Hap Seng Land Development Sdn Bhd.
The proceeds from the sale will be utilised for Hap Seng Consolidated’s working capital within two years.
The valuation was arrived at by using the cost method against Richmore’s parcel of commercial land, together with partially construction and development of a 41-storey serviced apartment building with three basement level of car parks valued on an “as is where is” basis.
The property is currently under construction at an estimated development cost of RM559mil and will have 328 units of service apartments in Kuala Lumpur.
The conglomerate said the proposed disposal would enable it to streamline and balance its portfolio mix between property development and property investment.
Moreover, the deal would also strengthen its financial position by deconsolidating Richmore’s borrowings of RM202mil as at June 30, as well as to meet its working capital needs which include property development activities.
The deal is a related party transaction as Gek Poh’s aggregate shareholdings in Hap Seng Consolidated now stands at 62.64%, comprising 54.63% direct stake and 8.01% indirect shareholdings through Hap Seng Insurance Services Sdn Bhd, which is a wholly-owned subsidiary of Gek Poh.
Upon the completion of the proposed disposal, Richmore will become a wholly-owned subsidiary of Gek Poh.
The latest deal is the third related party transaction by the group after it decided to dispose of its money lending businesses in the UK, HS Credit (Manchester) Ltd, to group founder and controlling shareholder Tan Sri Lau Cho Kun for £152.96mil (RM837mil).
A year ago, Hap Seng Consolidated sold HS Credit (Birmingham) Ltd also to Lau for around RM700mil.
Hap Seng Consolidated shares closed five sen higher at RM3.16 yesterday, giving it a market capitalisation of RM7.9bil.
