Eastland Equity proposes asset acquisition, capital reduction, diversification to improve financial position

KUALA LUMPUR (March 21): Eastland Equity Bhd is planning to acquire 92 commercial units at Bandar Tun Razak Business Park in Jengka, Pahang, as well as undertake a capital reduction exercise and business diversification, to improve its financial position.

In a bourse filing, the company said its wholly-owned subsidiary FBO Land (Setapak) Sdn Bhd has inked a conditional sale and purchase agreement with Eastland, Top Land Resources Sdn Bhd, Mentiga Development & Construction Sdn Bhd and Leading Ventures Sdn Bhd for the purchase of the commercial units for RM24.8 million, to be satisfied via the issuance of 381.54 million new shares at 6.5 sen apiece.

It said the move is in line with its investment objectives and growth strategy to provide Eastland with a sustainable and stable income stream, and to grow its net asset value per share by acquiring high quality, earnings accretive properties with strong recurring income.

The acquisition comes with a 5% per annum guaranteed rental return by the developer, which Eastland said will serve as a stable income stream for the group for five years.

Meanwhile, the group’s proposed capital reduction exercise is aimed at eliminating its accumulated losses.

This will involve the reduction of its entire capital reserve account of RM110.24 million, as well as the cancellation of RM66.11 million of its issued share capital.

“The company would also be in a better position to retain profits and enhance its ability to pay dividends in the future, as and when appropriate, following the elimination of the accumulated losses," it said, adding that the company will take into consideration its funding needs before declaring any dividends.

The hospitality and property development company also proposed a diversification of its operations to include renewable energy and energy efficiency-related technology and businesses, in a bid to diversify its earnings stream as its existing operations — comprising property development, investment properties and hospitality businesses — have been negatively impacted by the Covid-19 pandemic.

“The proposed diversification will also provide the group with an opportunity to participate in the growing demand within the renewable energy and energy efficiency industry,” said the group.

Eastland closed unchanged at 6.5 sen on Friday (March 18), giving it a market capitalisation of RM101.78 million.

Edited by Tan Choe Choe

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