KUALA LUMPUR (April 29): Construction outfit Ingenieur Gudang Bhd (KL:INGENIEU) said it will recover the debt owed to its subsidiary through the transfer of 38 property units in Kajang with a settlement value of RM13.69 million, converting an outstanding receivable into completed assets without any cash outlay.

In a filing with Bursa Malaysia on Wednesday, the group said its wholly-owned unit Ingenieur EPCM Sdn Bhd has entered into a tripartite settlement agreement with Keng Huat Construction Sdn Bhd and Paris Dynasty Land Sdn Bhd.

Under the arrangement, Keng Huat’s RM13.69 million debt to Ingenieur EPCM arising from subcontract works for the Louvre Residence project in Kajang will be novated to Paris Dynasty Land, the project developer, which will settle the sum through the transfer of 37 serviced apartments and one retail shop at the development.

Keng Huat was the main contractor for the Louvre Residence project, while Ingenieur EPCM acted as the subcontractor for the project.

Ingenieur said 26 of the serviced apartment units are vacant, while the remainder are tenanted, with monthly rents ranging from RM1,300 to RM1,900 per unit, or RM600 to RM980 per room for three units rented on a per-room basis. The retail unit is rented out at RM3,400 a month.

“Upon completion of the proposed debt settlement, the properties will be held by the group for rental purposes and/or for sale in the future,” the company said.

Ingenieur said the units have a combined built-up area of 42,115 sq ft and include 70 car park bays. It said the settlement value was agreed at RM300 per sq ft for the serviced apartments and RM1,214 per sq ft for the retail shop, with no independent valuation conducted.

However, it said internal assessments based on comparable transactions indicated market prices of about RM409 to RM637 per sq ft for serviced apartments and RM938 to RM1,688 per sq ft for retail lots in the vicinity.

“The proposed debt settlement represents a pragmatic and commercially viable alternative to cash recovery, enabling Ingenieur EPCM to mitigate credit risk and secure recovery of the outstanding amount in a timely manner,” it said.

Ingenieur’s shares closed unchanged at three sen on Wednesday, giving the company a market capitalisation of RM45.5 million.