GIIB Holdings Bhd, formerly known as Goodway Integrated Industries Bhd, is selling off three parcels of leasehold industrial land in Kuala Menggatal, Kota Kinabalu in Sabah for RM25 million.
The group, which diversified its core business of making rubber compound and tyre-related products to include property development and construction in 2014 is selling the land measuring about 2.31 hectares together with a four-storey building and two factories to Hexagon Supply Chain Solutions Sdn Bhd.
The three parcels of land comprising the buildings were acquired in May 2013 for RM16.4 million, it said in a recent filing with Bursa Malaysia.
GIIB Holdings said it spent around RM7.2 million on renovation works between 2014 and 2015.
The group said it arrived at the current market value of the property through a comparison made between the property and sales of other similar lands.
"The comparison approach of valuation was only used as a counter check. Due to the general slowdown of the property market caused by the impact of the Covid-19 pandemic, there were hardly any recent transactions of similar properties. Hence, this approach was less reliable as quantum adjustments had to be made to determine the value of the property. Accordingly, the adopted market value of the property is RM24.87 million," it said.
GIIB Holdings said the property is currently vacant and unoccupied.
It said the proposed disposal of the property, which was previously used for tyre retread manufacturing and retail would be undertaken by its wholly-owned subsidiary, Big Wheel Green Tyres Sdn Bhd.
GIIB Holdings, which has seen its revenue and profit decline since 2019 said the proposed disposal formed its ongoing business rationalisation initiatives that involved streamlining the business in a bid to turn around its financial performance, moving forward.
It said the proposed disposal is expected to be completed by the first quarter of the year 2022.
GIIB Holdings said the disposal consideration would first be utilised for payment of redemption sum to redeem the property from the bank and for partial settlement of the group's term loan with the bank, estimated at RM15.79 million.
"Any surplus therefrom will be allocated for the expenses for the proposed disposal and the remaining proceeds will be utilised for the working capital of the group," it said.