KUALA LUMPUR (October 5): Furniture maker Federal International Holdings Bhd (FIHB) sells leasehold land of about two hectares (20,044 square meters), on which an office and furniture factory is built, in Banting, Selangor to Filtermation (Mfg) Sdn Bhd (FMSB) for RM 24.5 million in line with FIHB’s plan to improve manufacturing efficiency by centralizing its manufacturing operations.
Proceeds from the proposed sale of land alongside Jalan Kompleks Perabut Olak Lempit will provide immediate cash flow to FIHB, which could use the money to fund a special dividend to shareholders and fund the seller’s expansion into new businesses, FIHB said in a case with Bursa Malaysia on Tuesday.
âThe management decided in [an] previous management review to move its current operations to a single location in Puchong for the group, as this would result in significant cost savings resulting from the operation of a single centralized factory center. Upon completion of the proposed divestiture, the company is expected to realize an estimated net gain on the divestiture (net of taxes and estimated expenses) of approximately RM 4 million.
âThe use of the net proceeds of the proposed divestiture will be reviewed and determined by the Board of Directors in the best interests of the business. The use may include, among others, the repayment of bank loans, expansion into new business opportunities that positively contribute to the growth of the group. continuous growth, for example the renewable energy segment, by reinvesting in the technologies of the industrial revolution 4.0 (IR 4.0) for its manufacturing division and the working capital needs of the company and / or its subsidiaries â, he declared.
“In addition, the board of directors may also consider the payment of a special dividend to shareholders upon completion of the proposed divestiture. The net proceeds are expected to be fully utilized within twelve months of the completion of the proposed divestiture,” said added the FIHB.
The proposed divestiture is expected to be completed by the second quarter of 2022, according to FIHB, which indicated that the initial cost of the investment for the land, which was acquired on Jan. 28, 1989, was 4.52 million. RM.
The net book value of the property as of June 30, 2021 was RM18.5 million.
“The market value of the land and factory of RM 19 million, as assessed by Messrs. Mohd Nor & Partners (KL) Sdn Bhd on the basis of an appraisal report dated December 31, 2019 and ‘an updated indicative assessment dated September 30, 2020 “, said the FIHB.
The FIHB share price closed unchanged at 60.5 sen, giving the company a market cap of RM82.38 million.
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