KUALA LUMPUR (Nov 23): Jentayu Sustainables Bhd, which engages in renewable energy, healthcare and trading of building materials, is disposing of a 12,884 sq ft piece of residential land in Jalan Mayang here to Armani Development Sdn Bhd for RM25 million, which will be satisfied via a combination of RM19 million cash and the remaining RM6 million in contra of units.

The original cost of investment by Jentayu Sustainables was RM15.5 million on Sept 30, 2010, while the audited net book value of the property amounted to RM25 million as at June 30, 2023.

As such, Jentayu Sustainables said the proposed disposal is expected to result in a pro forma loss of RM1.35 million to the group, after taking into account the estimated expenses for the transaction.

"The proposed disposal is in line with the group's consistent focus on its core business and to optimise the utilisation of assets owned. The proposed disposal provides Jentayu Sustainables an opportunity to unlock and realise the value of the property which represents part of its non-core assets, while providing a surplus cash flow arising from the sale of the property and reducing gearing level of the group," it added.

In a filing with Bursa Malaysia on Thursday, Jentayu Sustainables said it has entered into a conditional sale and purchase agreement (SPA) with Armani Development for the proposed disposal. Armani Development is a wholly-owned subsidiary of Golden Armani Sdn Bhd, whose shareholders are Datuk Seri Azlan Azmi and Kamarul Ariffin Mohd Alwi.

It intends to use the cash proceeds from the proposed disposal to repay bank borrowings and/or working capital. The contra units, when completed, will be considered for disposal, it noted.

"The proposed disposal will reduce bank borrowings by RM12 million, which will contribute positively to the consolidated NA per share and improve the gearing level of the group," Jentayu Sustainables said.

Barring any unforeseen circumstances, the SPA is expected to be unconditional by the second quarter of 2024.

Jentayu Sustainables shares closed up three sen or 2.5% at RM1.23 on Thursday, with 14.45 million shares changing hands. Its market capitalisation stood at RM516.87 million.