KUALA LUMPUR: Kanger International Bhd is selling its two commercial buildings and land in Ganzhou city, China for RM258.9 million.
The company said its subsidiary Ganzhou Kanger Industrial Co Ltd had entered into a letter of intent (LOI) with Huizhou ZhongNeng Construction Ecological Resources Technology Co Ltd for the disposal.
Huizhou ZhongNeng Construction Ecological Resources Technology is a subsidiary of China Energy Construction Co Ltd.
China Energy is a Chinese state-owned energy conglomerate involved in the design and construction of power projects as well as manufacture of power industry related equipment.
Kanger executive director Steven Kuah Choon Ching said the company would be able to realise significant capital gains as well as raise a sizable amount of its cash flow.
Kuah said as it pivoted into the construction business segment, the disposal of the properties was timely as it enlarged Kanger's war chest to fund the expansion of its construction division.
"The proceeds raised will be used as working capital for our existing seven construction projects totalling RM1.0 billion in orderbook.
"Furthermore, with a stronger balance sheet, we would be able to take on larger scale construction projects, thus enhancing our competitive advantage when tendering for new projects," he said.
Kuah said Kanger was eyeing to become a formidable construction player by leveraging on its business network and proactively participating in construction tenders.
"We believe the ongoing transformation journey will augur well for the company and increase our shareholders' value in the coming years.
"In the near term, we expect a healthy recovery in our financial performance stemming from the resumption and recovery of economic activities," he added.
Upon conversion of the land parcel from industrial to commercial status, both parties will enter into a definitive agreement whereby the final purchase price will be determined based on the market value of commercial land in the same area which is estimated to be RMB400 million (RM258.9 million).
The two commercial buildings comprise a 19-storey hotel and a purpose-built six-storey, one stop "AutoCity" at Ganzhou Economic and Technological Development Zone.