Eurospan’s RM55 mil sale of assets to controlling shareholder 'fair and reasonable', says independent adviser

• The group’s unit Eurospan Furniture Sdn Bhd is also disposing of two freehold industrial lands with buildings on-site to DFSB for RM15.65 million cash, and will lease back the properties for the next two years at RM87,671 per month.

KUALA LUMPUR (Nov 20): Eurospan Holdings Bhd’s proposed RM54.55 million sale of its furniture manufacturing unit and properties in Seberang Perai to its controlling shareholder for future leaseback has been deemed “fair and reasonable” by independent adviser Mainstreet Advisers Sdn Bhd.

Eurospan is disposing of Dynaspan Furniture Sdn Bhd (DFSB) for RM38.9 million cash to its executive chairman and largest shareholder Guan Kok Beng, managing director Guan Shaw Yin and deputy MD Guan Shaw Kee.

The group’s unit Eurospan Furniture Sdn Bhd is also disposing of two freehold industrial lands with buildings on-site to DFSB for RM15.65 million cash, and will lease back the properties for the next two years at RM87,671 per month.

The disposals were made as Eurospan wanted to fund new acquisitions as part of its diversification efforts to reverse years of losses.

Of the proceeds, RM15 million is earmarked for new acquisitions, while RM8.88 million will be distributed as special dividends of 20 sen per share,

The balance will be used for working capital (RM24.74 million), payment owing to DFSB (RM4.28 million), and expenses for the disposals (RM1.65 million). In total, Eurospan expects net pro forma gain of RM27.28 million on the disposals.

In a circular to shareholders, Mainstreet Advisers pointed to DFSB’s sale price, which is approximately equivalent to its adjusted net asset value of RM38.89 million.

The properties, meanwhile, had an appraisal value of RM15 million, it said, adding that the monthly rental which averaged at RM1 per sq ft is within range of comparable properties at 98 sen to RM1.01 per sq ft.

“Based on the above, we are of the view that the overall financial effects of the proposals are not detrimental to the non-interested shareholders of Eurospan,” it said.

Shareholders of Eurospan will vote on the proposals at an extraordinary general meeting in Penang on Dec 8, 2023.

Eurospan shares have climbed leading to the announcement of the proposals on Aug 24 this year. From its low of RM1.14 in June,  Eurospan's share price has risen by 29.82% or 34 sen to RM1.48 at the time of writing, giving it a market capitalisation of RM65.74 million.

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