KUALA LUMPUR (March 28): Seremban Engineering Bhd (KL:SEB) has proposed to dispose of a piece of  land together with a detached factory near Seremban for RM19.5 million, as part of the company's business rationalisation plan.

The property, which has a land area of 179,369 sq ft with a net lettable area of 67,506 sq ft, is located at the Senawang Industrial Park. It was used by the company to manufacture process equipment used in industries such as palm oil, chemicals, oil and gas, water treatment and food processing.

However, the company has now decided to monetise the property and reallocate its manpower and machinery resources to its main fabrication plant in Senawang, the engineering company said in a bourse filing on Friday.

"The board opines that the reallocation of the group's resources from the subject property to its main fabrication plant would allow the group to reduce its overall operating costs via the consolidation of two local fabrication plants into one," the company said.

Seremban Engineering said the disposal of the property to Vazzo Marketing Sdn Bhd is expected to result in a pro forma gain of RM10.15 million, after deducting transaction costs and net book value.   

It said the original cost of investment was RM8.76 million, comprising a purchase consideration of RM3.62 million for the land and construction cost of RM5.14 million for the factory building.

Seremban Engineering said that of the RM19.5 million proceeds from the disposal, RM15.6 million will be placed in fixed deposit as security for banking facility, RM2.15 million for repayment of bank borrowings and RM1.75 million for estimated expenses in relation to the exercise.

Shares of Seremban Engineering last traded at 57.5 sen, valuing the company at RM46 million.