KUALA LUMPUR (April 28): Loss-making Widad Group Bhd (KL:WIDAD) is selling a 12-storey office building in Damansara Heights, Kuala Lumpur, at a loss to reduce its borrowings.

In a bourse filing, Widad said its wholly owned Widad Builders Sdn Bhd has inked a sale and purchase agreement with Richfield Builder for the disposal of the property for RM41.5 million cash, to Richfield Builder (M) Sdn Bhd. Richfield Builder is wholly owned by Dhaya Maju Infrastructure (Asia) Sdn Bhd

The property, which includes six levels of elevated parking, holds a 99-year lease expiring on Jan 30, 2073. The building, about 28 years old, stands on land measuring about 1,607.73 sq m. As of Dec 31, 2023, the property's audited net book value was RM39.69 million.

Proceeds from the disposal will be used to repay borrowings associated with the property and to provide funding for working capital. “The disposal is expected to incur an estimated loss of RM1.2 million, hence reducing net tangible assets (NTA) accordingly. However, gearing will improve following the reduction of borrowings by RM40 million," the company added in its statement.

Shares of Widad closed unchanged at 3.5 sen on Monday, giving the company a market capitalisation of RM109 million. The counter has experienced a decline of 12.5% so far this year.