TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : NON RELATED PARTY TRANSACTIONS IRE-TEX CORPORATION BERHAD ("Ire-Tex" or "the Company") - PROPOSED DISPOSAL OF ALL THAT PIECE OF LEASEHOLD LAND (EXPIRING ON 2 JULY 2067) HELD UNDER H.S.(D) 445650 PTD 194752, MUKIM PLENTONG, DAERAH JOHOR BAHRU, NEGERI JOHOR DARUL TAKZIM MEASURING APPROXIMATELY 1.012 HECTARES TOGETHER WITH THE BUILDING(S) ERECTED THEREON BY IRE-TEX (JOHOR) SDN BHD (A 70%-OWNED SUBSIDIARY OF IRE-TEX), FOR A CASH CONSIDERATION OF RM8,800,000

IRE-TEX CORPORATION BERHAD

Type Announcement
Subject TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS)
NON RELATED PARTY TRANSACTIONS
Description
IRE-TEX CORPORATION BERHAD ("Ire-Tex" or "the Company")  
- PROPOSED DISPOSAL OF ALL THAT PIECE OF LEASEHOLD LAND (EXPIRING ON 2 JULY 2067) HELD UNDER H.S.(D) 445650 PTD 194752, MUKIM PLENTONG, DAERAH JOHOR BAHRU, NEGERI JOHOR DARUL TAKZIM MEASURING APPROXIMATELY 1.012 HECTARES TOGETHER WITH THE BUILDING(S) ERECTED THEREON BY IRE-TEX (JOHOR) SDN BHD (A 70%-OWNED SUBSIDIARY OF IRE-TEX), FOR A CASH CONSIDERATION OF RM8,800,000

For consistency, the abbreviations and capitalised terms used throughout this announcement shall have the same meanings as defined in the announcement dated 19 August 2016 in relation to the Proposed Disposal, where applicable, unless stated otherwise or defined herein.

Further to the Company’s announcement made on 19 August 2016, the Board of Directors of Ire-Tex wishes to announe the following additional information in relation to the Proposed Disposal:-

1. The approximate age of the building.

9 years.

2. Rental income per month/annum from renting of the Property.

The Property is currently generating rental income of RM55,000 per month.

3. The market value of the Property assessed by the Valuer and the method of valuation;

The Valuer had vide its valuation report dated 22 December 2015 assessed the market value of the Property at RM9,000,000 on an ‘as-is’ basis using Comparison Approach (“Comparison Approach”) and Cost Approach (“Cost Approach”).

Under the Comparison Approach, an estimate of value is derived by comparing the Property under valuation with other properties of similar size, quality and location that have been sold in recent times.

Under the Cost Approach, value is derived by estimating the replacement cost of the building and other improvements, based on today’s labour and material prices and present construction techniques. From this total, a subtraction is made for accrued depreciation (being for physical deterioration, functional obsolescence and economic obsolescence), and the land value found by the market comparison is then added to derive a summation estimate of value.

4. Rationale for disposing the Property at a loss and below market value; and

The Company has recognised the fair value gain on the Property of approximately RM3.7 million in the financial year ended 31 December 2015 based on the valuation conducted in December 2015. Therefore, the disposal would result in a loss of RM200,000.

However, the Disposal Consideration represents an appreciate in the value of the Property since it was acquired in 2006 for RM1,347,680.

Considering the weak market sentiment and the existing tenancy which will expire in September 2016, the Company viewed that it would be more viable to sell the Property as the disposal would allow the Company to unlock the value of the asset and the proceeds raised could be utilised for the repayment of bank borrowings for the Group.

5. The total borrowings of the Group as at Latest Practicable Date, and the estimated interest savings per annum from repayment of borrowings.

The total borrowings of the Group as at 19 August 2016, being the latest practicable date of the Company’s announcement dated 19 August 2016, is approximately RM41.8 million. The estimated interest savings per annum from repayment of borrowings is approximately RM450,000.

This announcement is dated 23 August 2016. 






Announcement Info

Company Name IRE-TEX CORPORATION BERHAD
Stock Name IRETEX
Date Announced 23 Aug 2016
Category General Announcement for PLC
Reference Number GA1-23082016-00070