Perak Corp expects RM26.6 mil gain from land development entitlement

• Perak Corp anticipates an estimated gain of RM26.59 million from the settlement, translating to an earnings per share of 26.59 sen. The gain is expected to increase the company's net assets per share by the same margin and reduce the company’s gearing ratio by 4%.

KUALA LUMPUR (Feb 13): Financially-troubled Perak Corp Bhd (KL:PRKCORP) said it is entitled to a RM40.38 million entitlement after entering into a supplemental agreement concerning the development of a 56.3-acre land known as the Teluk Dalam land.

The state-owned Practice Note 17 (PN17) company said the supplemental agreement with its parent company Perak State Development Corporation (PKNPk) and Uni-Poh Construction Works Sdn Bhd modified the terms of the joint development agreement signed on March 8.

The development agreement was part of PKNPk's effort to provide “an avenue for Perak Corp to generate sustainable and recurring income” to boost its cash flow and strengthen its financial position as part of its regularisation plan, Perak Corp had announced previously.

In its filing on Thursday, Perak Corp said its entitlement of RM40.38 million will be reduced by a sewerage treatment plant contract sum of RM17.5 million and the land premium payable to the state authority of Perak amounting to RM4.86 million.

This leaves a balance of RM18.02 million, which will be settled through a structured instalment plan spanning 48 months, the company said.

Notably, the payments are not contingent upon the progress of the joint development project or the receipt of sales proceeds from end-purchasers, providing Perak Corp with a predictable revenue stream, mitigating risks related to project delays and market fluctuations.

Perak Corp anticipates an estimated gain of RM26.59 million from the settlement, translating to an earnings per share of 26.59 sen. The gain is expected to increase the company's net assets per share by the same margin and reduce the company’s gearing ratio by 4%.

Perak Corp said that the settlement is a key component of its regularisation plan, intended to bolster its cash flow and strengthen its financial position.

The housing project under the March 2024 development agreement between Perak Corp and Uni-Poh Construction is slated for completion by 2032. The new supplemental agreement builds on that agreement, ensuring Perak Corp receives its entitlement independently of the project's sales performance.

The settlement is expected to be completed by the first quarter of 2029.

Proposed land disposal to meet working capital requirements

In a separate announcement on Thursday, Perak Corp said it is disposing of three plots of state land in Lumut, Perak for a total of RM8.53 million, the proceeds of which will be directed towards working capital for the company.

The parels of land are being sold to Lumut Maritime Terminal Sdn Bhd (LMTSB), which is an indirect subsidiary within the group. The transaction, which constitutes an intercompany transaction within the Perak Corp group, enables LMTSB to assume direct ownership and management of the asset in line with its operational requirements.

The principal activities of LMTSB are maritime services, inclusive of tuggage, pilotage, berthing, stevedorage, cargo handling, storage and ancillary services. 

"The land holds strategic importance in supporting LMTSB’s expansion plans, enhancing port efficiency, and strengthening its service capacity, ultimately contributing to the group’s overall value creation," Perak Corp said.

The sale is expected to yield a net gain of RM6.01 million at the company level.

The proposed disposal is expected to be completed by the third quarter of 2025. 

Shares of Perak Corp were down half a sen or 1.25% to close at 39.5 sen for a market capitalisation of RM39.5 million.

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