Loss-making Talam Transform Bhd (formerly Talam Corp Bhd) is selling its entire 85 per cent stake in Jilin Province Maxcourt Hotel Ltd (JPMHL) as well as an assignment amount of creditors rights to Jilin Provincial Expressway Group Co Ltd (JPEGCL) for a total of 72.74 million yuan (RM46.67 million) in cash.
Talam stated in a stock exchange filing yesterday that the proposed disposal is expected to generate a cash inflow of about RM44.86 million, allowing the company to significantly improve its liquidity position for the working capital of the group's property development projects.
For the disposal, Talam and its wholly-owned subsidiary Malim Enterprise (HK) Ltd (MEL) have signed two separate agreements with JPEGCL.
JPEGCL will acquire MEL's equity interest in JPMHL as well as MEL's and Talam's creditors' rights in JPMHL.
In the first agreement, Talam will sell its 3.82 million yuan assignment of creditors' rights in JPMHL for 3.82 million yuan (RM2.45 million).
In the second agreement, MEL will sell its entire 85 percent stake in JPEGCL for one yuan, with a 68.92 million yuan assignment of creditors' rights for the same price (RM44.22 million).
Talam said the original cost of investment in JPMHL on December 31, 1997, was RM73.38 million.
The proposal is expected to be completed by the end of March 2022.
JPMHL was involved in the operations of the Maxcourt Hotel in Changchun, Jilin, China, but the hotel has been closed since 2014 and is now in liquidation.
Maxcourt is a four-star hotel with 228 rooms of various room types.
According to Talam's website, it has one existing property project, Ukay Perdana, a leasehold development in Ukay, Ampang. The website provided no additional information about this project.
Talam reported a net loss of RM5.82 million in the first quarter ended June 30, 2021, on revenue of RM2.85 million from its existing operations of property development, property investment, and construction.
The property development division earned RM200,000 in revenue from stock sales. It reported an RM5.65 million pre-tax loss to Bursa Malaysia in September.
The property investment and management division earned RM1.12 million in revenue. According to Talam, revenue for the division was down 25.7 percent compared to the same quarter last year, owing primarily to the loss of rental income contribution from JPHML, which will be liquidated in November 2020.
Talam also claimed that the Covid-19 pandemic and a series of Movement Control Orders had harmed the company's tenants in Menara Maxisegar and Pandan Kapital Shopping Complex.
It stated that, despite the fact that the company had devised rental assistance plans to assist affected tenants in the form of rebates and/or deferment, a number of tenants were unable to sustain their businesses and were forced to vacate the rented premises.
On the company's prospects, Talam said that its joint venture projects are still ongoing, albeit at a slower pace due to the soft property market.
Talam also stated that it had submitted new development plans for various parcels of land, some of which had already been approved by the appropriate authorities.