KUALA LUMPUR: Enra Group Bhd's shareholders today approved low yielding asset sales to Tan Sri David Law Tien Seng for RM85.15 million.
"Shareholders have all voted in favour of selling off the low yielding asset as the proceeds will be used to pare down debt," said Enra deputy chairman Tan Sri Kamaluddin Abdullah.
The assets are 40 retail units in Holiday Plaza, including 16 office units (for RM51.85 million), and the basement car park (for RM28 million).
At the same time, it is selling three subsidiaries for RM133,921 to Law whereby each of the subsidiaries own a retail unit in Holiday Plaza.
It is also selling six office units in Taman Shamelin Perkasa here, for RM5.16 million.
Kamaluddin was speaking to reporters yesterday after the company's shareholders meeting. Also present was executive director KC Kok.
He said Enra intends to use RM36.96 million from the sale proceeds to repay bank borrowings, and another RM38.69 million to invest in or develop assets to be identified.
The remainder is to be used for working capital and estimated expenses for the proposed disposal.
"When we repay the borrowings, Enra's gearing will be brought down to 0.1 times from the current 0.4 times," he said.
Kamaluddin noted that in the past two years, Enra had gone through considerable consolidation considering its core activities are in property development and oil and gas.
"Although it has taken a while, timing is in our favour. Our balance sheet is looking better as we dispose off legacy assets.
"I would say we're now in a strong position to take advantage of anticipated upturn in the market," he added.
Last year, its subsidiary Enra Labuan Sdn Bhd has entered into a conditional sale and purchase agreement with Perbadanan Labuan to buy 60ha of leasehold land for reclamation in Labuan, for RM7.5 million.
The agreement includes an up to a 5-year call option to acquire a further 140ha of connecting leasehold land.
Last month, Prime Minister Datuk Seri Najib Razak announced plans to build a bridge connecting Labuan and Menumbok town in Sabah.
Kamaluddin said Enra welcomed this good news as this would benefit its future development at Labuan.
When asked on dividends, Kamaluddin replied there is no fixed policy as Enra is still growing and the management needs to ensure there is adequate liquidity.