Tropicana sells freehold plot in Gelang Patah for RM569.9m

KUALA LUMPUR (July 4): Tropicana Corp Bhd is selling a freehold plot measuring 251.6 acres (101.8ha) in Gelang Patah, Johor, for RM569.9 million cash.

The group expects to realise a gain on disposal of about RM55.5 million, said Tropicana in a bourse filing last Friday.

Its original cost of investment in the plot stood at RM366.6 million, while the net book value as at Dec 31, 2015 was RM413.7 million.

“The net proceeds of approximately RM218.4 million after repayment of bank borrowings, taxes and related expenses arising from the disposal is expected to be utilised for working capital, as well as repayment of bank borrowings of Tropicana and its group of companies,” it said.

The sale and purchase agreement (SPA) to effect the disposal was inked with Tiarn Oversea Group Sdn Bhd by Tropicana Desa Mentari Sdn Bhd (TDM), a wholly-owned unit of Tropicana Golf & Country Resort Bhd, which is in turn a wholly-owned unit of Tropicana.

The SPA is conditional upon some conditions precedent, like TDM having applied for and obtained the relevant development order or approval in accordance with the proposed development plan which was prepared, determined and agreeable by Tiarn, at the cost and expenses of Tiarn.

TDM also has to apply for and obtain additional infrastructure construction approvals like the right to construct a highway interchange on the land, and the right to enlarge an existing tunnel marked in the layout plan.

Other conditions include approval for conversion of category of land use and subdivision of the land. Parts of the vacant plot are now listed for agriculture and industrial use.

Tiarn intends to undertake a two-phase development on the land, with Phase 1 comprising 60 acres and the remaining 191.6 acres constituting the second phase.

Tropicana expects to complete the disposal, for which it will be paid in stages over five years, in the second half of 2022.

Tropicana closed unchanged at RM1.03 last Friday, giving it a market value of RM1.47 billion.

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This article first appeared in The Edge Financial Daily, on July 4, 2016. Subscribe to The Edge Financial Daily here.