KUALA LUMPUR: LBS Bina Group Bhd is selling its stake in China's first permanent motor racing circuit for RM124.7 million (RMB192.18 million).
In a filing with Bursa Malaysia Securities Bhd, the group said its wholly owned unit Dragon Hill Corporation Ltd, plans to sell its entire 100 per cent interest in Lamdeal Investments Ltd (LIL) to Huafa Urban Operation (HK) Ltd.
LIL holds a 60 per cent interest in motor racing circuit operator Zhuhai International Circuit Limited (ZICL).
As part of the deal, Huafa will settle RM147.9 million in loans LIL and its subsidiaries, owe LBS Bina.
LBS Bina said the group will book a proforma gain of RM80 milion from the sale of LIL.
The group said LIL's losses due to amortisation of its land and expiry of ZICL land use right in 19 years on Oct 23, 2043 makes it an opportune time to monetise its investment.
As at Dec 31, 2023, the net book value of LIL Group is about negative RM54 million.
"The racing circuit has encountered increasingly tough challenges due to increasing stringent sustainability compliance requirements. These challenges include addressing noise-related issues where compliance with these regulationsnecessitates significant operational adjustments," LBS Bina said.
The proposed disposal of LIL is also in line with the group's strategy of preserving capital value and strengthen its balance sheet by realising cash resources which can then be deployed in other projects and investments, to maximise the returns of the group and/or for repayment of borrowings.
Trading in LBS Bina's shares were suspended pending the announcement.
It last traded at 89 sen a share on June 18, 2024, giving it a market capitalisation of RM1.4 billion.