Rex Industry Bhd’s subsidiary, Rex Canning Co Sdn Bhd, has recently entered into a conditional sale and purchase agreement with SkyDorm Industries for the disposal of 31,428 sq metres of land in Seberang Perai, Penang for RM41.8 million. SkyDorm Industries is indirectly owned by property developer Ewein Bhd, which is also based in Penang.
The first property being sold comprises a piece of land and hereditaments measuring 24,377 square metres, along with beverages and canning factories, warehouses, and a 3-storey office block in Seberang Perang Tengah. It is a leasehold property with 35 years remaining, expiring on 2 January 2058. The second property consists of a piece of land and hereditaments measuring 7,051 square metres and the building occupying the land in Simpang Ampat, Seberang Perai. This property is also a leasehold property with 46 years remaining, expiring on 7 January 2069.
The proposed disposal is part of Rex’s business rationalization plan, aimed at reducing overall business operating costs and improving its financial position. The properties were previously used as a production facility for canned food and drinks but were decommissioned on June 2. The company intends to reallocate its resources to its production facilities in Jawa Timur, Indonesia, and Batu Pahat, Johor, to enhance production capacity and reduce operating costs.
The group expects the disposal to be completed by the third quarter of 2024 and anticipates a pro forma gain of around RM19 million. This gain is expected to positively impact the group’s earnings and LPS for the FYE 30 June 2024. The proceeds from the sale will be utilized for repayment of bank borrowing, working capital, and expenses related to the disposal.
The disposal consideration of RM41.8 million was determined based on the market value of the properties as appraised by valuer Nawawi Tie Leung Property Consultants Sdn Bhd. The appraised market value was RM40 million as of October 5, making the disposal consideration a premium of RM1.8 million or approximately 4.50% above the market value.
Overall, the proposed disposal of properties by Rex Canning Co Sdn Bhd aligns with the group’s strategic business objectives and is expected to have a positive impact on its financial performance in the coming years.