E&O to sell Lone Pine Hotel in Penang for RM85 mil
KUALA LUMPUR (June 19): Eastern & Oriental Bhd (E&O) is divesting one of its subsidiaries, E&O Express Sdn Bhd (EOE), which owns and operates the Lone Pine Hotel in Batu Feringghi, Penang, for RM85 million.
Following the divestment, E&O expects to realise an estimated gain on disposal after taxation of approximately RM23.3 million, according to its Bursa Malaysia filing last Friday.
A share sale agreement has been inked with Langkawi Saga Shopping Centre Sdn Bhd and Lubritrade Trading Pte Ltd to effect the disposal.
Of the sale proceeds, the bulk will be used for working capital and repayment of bank borrowings, while RM1.14 million will be used for estimated expenses with regards to the proposed sale.
Specifically, E&O said RM21.84 million will be used for settlement of a redemption sum owed by EOE to an unnamed local financial institution, while RM11.09 million will be to settle a loan EOE took from E&O.
E&O said the sale consideration was arrived at on a “willing buyer and willing seller” basis after taking into consideration the fair valuation of the Lone Pine Hotel.
“The proposed sale is in line with the group’s strategy of strengthening the balance sheet via realising cash resources which can then be deployed in identified projects and investments to maximise the returns of the E&O Group and/or for repayment of borrowings,” E&O said.
Barring any unforeseen circumstances, the proposed sale is expected to be completed by October 2017.
E&O shares closed 1.7% or three sen lower at RM1.74 last Friday, valuing the group at RM2.3 billion. — theedgemarkets.com