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Equine said in a statement on Feb 11 that the land has a leasehold tenure of 99-years expiring on 27 May 2098 and is zoned for residential buildings.
The reason for the disposal was because of the steep sloping gradient which will make construction activities there more challenging than normal. "This will cause any property development on the land to be subject to high risk of returns, and thus, the rationale to sell the land, rather than to leave it idle," Equine said.
It added that it will be able to recoup all costs incurred through the sale of the land. The sale is expected to increase Equine’s profit after tax by RM1.4 million for the financial year ending 31 March 2010. This will increase earnings per share by RM0.006.
Equine said that it will use the cash within 12 months from this sale as working capital for the group’s property development activities.
According to the agreement, Meridian will pay a deposit of RM1.1 million, consisting of 10% of the sale consideration, to be paid upon execution of the SPA. While the balance of RM10.0 million of the disposal consideration will be paid within three months from the effective date upon the full compliance of the conditions of the SPA.
The sale is subject to the authorities’ approval and is expected to be completed by July 2010.
The piece of land was acquired in the year 1999 for RM693,180. In 2003 after Equine’s listing, the land was revalued to RM6.1 million. The carrying value of the land and its capitalized expenditure as reported for the financial year ended 31 March 2009 was RM9.2 million.
