KUALA LUMPUR (March 1): Shareholders of YNH Property Bhd gave their nod for the disposal of Kiara 163 Retail Park here and AEON Seri Manjung in Perak for a total of RM422.5 million in cash to ALX Asset Bhd.

The disposal will help to pare down bank borrowings and add working capital requirements for the group.

“The disposal will generate an infusion of RM422.5 million into the YNH group and this will strengthen our balance sheet while allowing our group to gain more headroom to secure future funding required to finance other exciting projects within our landbank as well as kick-starting our flagship project, Menara YNH,” said independent non-executive director Ching Nye Mi at the company’s extraordinary general meeting on Wednesday (March 1).

According to Ching, YNH remains optimistic on the outlook of the property sector in Malaysia and expects to continue to receive rental income of approximately RM6.4 million per annum from its current properties located in Perak.

“Our ongoing property development projects including Solasta Dutamas and future property development projects located in Genting Highlands are also expected to contribute positively to our group’s financial performance in the foreseeable future,” he added.

YNH is expected to record a pro forma net gain of approximately RM61 million from the proposed disposal exercise, which will improve its net assets and earnings.

The purchase of the two assets will be satisfied by ALX Asset entirely in cash, through the issuance of medium-term notes (MTNs) under a proposed asset-backed MTN programme of up to RM500 million in nominal value.

YNH has also disclosed in its circular to shareholders that the proposed disposal is a related party transaction.

Under the asset-backed MTN programme, YNH executive chairman and executive director Datuk Dr Yu Kuan Chon will be subscribing to the first tranche of the junior MTNs.

Kuan Chon’s brother, Datuk Yu Kuan Huat, who is the managing director of YNH, is also deemed interested in the proposed disposal.

Kuan Chon is the single largest shareholder of YNH, holding a 24.4% direct interest and an 8.2% indirect interest. This is followed by Kuan Huat, who has a 4.5% direct interest and a 24.9% indirect interest.

Shares of YNH closed unchanged at RM4.70, giving it a market capitalisation of RM2.94 billion.