KUALA LUMPUR (June 18): UEM Sunrise Bhd (KL:UEMS) has disposed of its remaining 40% stake in a joint venture, Aura Muhibah Sdn Bhd (AMSB), to Kuala Lumpur Kepong Bhd (KL:KLK) as the latter exercised its call option.
The sales proceeds of RM386.2 million would be utilised to pare down UEM Sunrise's outstanding debt upon maturity by the year end, which will in turn reduce the group’s gross gearing from 0.61 times to 0.55 times, according to the filing to Bursa Malaysia.
UEM Sunrise is expected to recognise a net disposal gain of RM32 million.
Upon completion of the deal, KLK will wholly own the joint venture that owns 2,500 acres of land in Kulai, southern Johor.
The joint venture was formed a decade ago in February 2014. The plan then was to have mixed residential, commercial and industrial development, as stated in the filing at that time.
UEM Sunrise said the disposal stake in AMSB is in line with the group’s turnaround strategic plan to transform into a balanced real estate player — with the immediate goal of strengthening financial performance through the monetisation of non-strategic lands and assets.
UEM Sunrise has the opportunity to realise a gain on disposal and unlock the value of one of its longstanding assets, it added.
“Subsequently, this will also allow the company to strategically focus on its other assets in the southern region, particularly the industrial developments in Gerbang Nusajaya, Iskandar Puteri,” it further added.
UEM Sunrise said the deal is expected to be completed on June 29.
UEM Sunrise’s share price closed down two sen or 1.7% at RM1.16, bringing the group a market capitalisation of RM5.87 billion.
KLK, meanwhile, was down 28 sen or 1.4% to RM20.22, giving the group a market capitalisation of RM22.22 billion.