KUALA LUMPUR (July 6): Berjaya Property Bhd (KL:BPROP) has partnered with China-based Wanli Tire Co Ltd to set up a RM1.3 billion automotive tyre manufacturing plant in Selangor.
Of the total funding of RM1.3 billion, RM813.35 million will be funded through equity contributions by Berjaya Property’s wholly-owned unit, Alam Baiduri Sdn Bhd (ABSB), and Wanli Tire's unit Trusmax Investment Co Ltd.
ABSB will own 30% of the proposed joint venture (JV) while the remainder 70% will be held by Trusmax.
The remaining RM491.45 million will be financed via borrowings, according to a bourse filing on Monday.
ABSB entered into a JV agreement on Monday with Trusmax. The JV will oversee research, development, design, manufacturing and sales of tyres and related components, as well as after-sales services.
"The proposed JV will enable the Berjaya Property to venture into the automotive tyre manufacturing business by leveraging Wanli’s technical expertise, manufacturing know-how and industry experience," the company said.
ABSB will inject a parcel of freehold land measuring about 67.90 acres at an agreed value of RM118.31 million into the JV.
Of the RM813.35 million equity contributions, Trusmax will contribute RM569.34 million in cash, while ABSB will contribute RM244.01 million, comprising RM125.70 million in cash and 67.90 acres of freehold land at an agreed value of RM118.31 million.
The land is part of an oil palm plantation located along Jalan Bukit Tagar, measuring about 372.55 acres, that had a net book value of RM56.17 million as at end-June this year. The agreed land value was arrived at after taking into consideration certain construction works as well as land conversion and subdivision costs to be undertaken by ABSB, estimated to be about RM60 million.
Altogether, ABSB's cash contribution will total RM185.70 million — inclusive of the cost for land conversion and subdivision works — which will be funded through internal funds and borrowings of Berjaya Property.
Berjaya Property shares closed unchanged at 25 sen on Monday, valuing the company at RM1.25 billion.