KUALA LUMPUR (March 4): EcoFirst Consolidated Bhd is selling a piece of vacant land in Shah Alam at a loss to HCK Capital Group Bhd, saying the disposal will release it from the burden of monthly loan instalments of about RM1.35 million to its financier.

The proposed disposal, at RM34 million, "would be a great stress relief to the group’s cash flow as compared to retaining the land for a potential loss-making development", the group added in an exchange filing on Monday.

As at Nov 30, 2023, EcoFirst’s total borrowings stood at RM268.54 million, while its cash and bank balances totalled RM9.52 million.

EcoFirst said its wholly owned subsidiary EcoFirst Worldwide Sdn Bhd had entered into an agreement with HCK Capital's unit, HCK Estates Sdn Bhd, for the disposal of the leasehold land in Cahaya SPK, which measures 19,243 sq m.

The sale price of RM34 million is RM15.32 million less than the property's net book value of RM49.18 million. However, EcoFirst said the market value of the land, as certified by valuer CCO & Associates (KL) Sdn Bhd, is only RM31 million.  

Of the proceeds, RM20.03 million is earmarked for the repayment of the outstanding loan to the vendor's financier, the group said.

Another RM13.04 million will be used for general working capital, while RM800,000 will be used to repay an outstanding amount owed to Modern Peak Sdn Bhd, the company from which EcoFirst acquired the land. The remaining RM140,000 will be used for expenses relating to the land disposal.  

EcoFirst said the disposal is expected to be completed by the first half of 2024.

EcoFirst shares closed unchanged at 34 sen on Monday, bringing the group a market capitalisation of RM411 million.