KUALA LUMPUR (Oct 11): Gadang Holdings Bhd (KL:GADANG) is disposing of a leasehold land in Damansara Perdana for RM65 million to partially finance its existing construction projects and repay borrowings.

“The key rationale for the proposed disposal is to strengthen Gadang Group's cash flow position and to reallocate its cash flow to its ongoing and future construction projects. It is also in line with Gadang Group’s strategy to pare down its existing borrowings to improve its gearing level,” the group told Bursa Malaysia.

In its filing, the group said it has — via its wholly-owned unit Gadang Construction Sdn Bhd — inked a deal to sell the land, measuring 10,779 sq m, to property developer Opulent Abode Sdn Bhd.

Of the gross proceeds of RM65 million, RM49.68 million will be allocated to part-financing of existing construction projects, RM13.72 million for repayment of bank borrowings and RM1.6 million for incidental expenses in relation to the proposed disposal.

The exercise, which is expected to be completed by the first quarter of 2025, will reduce the group’s interest-bearing borrowings to RM171.54 million from RM187.16 million, while gearing is expected to decrease to 0.22 times from 0.24 times.

Shares of Gadang closed unchanged at 35 sen on Friday, giving it a market capitalisation of RM280.3 million.