Rex Industry Bhd’s (Rex) subsidiary Rex Canning Co Sdn Bhd today (Nov 10) entered into a conditional sale and purchase agreement (SPA) with SkyDorm Industries for the disposal of 31,428 sq metres 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.
In a Bursa listing today, the canned foods, biscuits and drinks manufacturer said that first property comprises of the 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 of 60 years with 35 years remaining, expiring on 2 January 2058.
The other is a piece of land and hereditaments measuring 7,051 square metres and the building occupying the land in Simpang Ampat, Seberang Perai.
It is a leasehold property of 60 years with 46 years remaining, expiring on 7 January 2069.
Rex said the proposed disposal is in line with the group’s business rationalisation plan, where the group intends to undertake certain measures to reduce its overall business operating cost as well as improve its financial position moving forward.
The properties were initially utilised by the company as a production facility for its canned food and drinks business but on June 2, the company decommisioned the properties.
“This is part of its business rationalisation plan and intention to downsize and reallocate the company’s resources to its two other production facilities in Jawa Timur, Indonesia and Batu Pahat, Johor.
“This will allow the Company to utilise its resources more efficiently and reduce its operating costs. Reallocation to Batu Pahat allows consolidation of two local productions.
“Meanwile, reallocation to to Jawa Timur will enhance production capacity of our exported canned food to international customers such as United States and Asia, which may strengthen the company’s revenue contribution from exports,” it said.
Exports has contributed approximately 59.4% of the group’s revenue for the FYE 30 June 2023.
The group said proposed disposal is expected to expected to be completed by the third quarter of 2024 and will result in a pro forma gain to Rex and its subsidiaries for a total of around RM19 million.
“It is expected to contribute positively to the earnings and LPS of the group for the FYE 30 June 2024,” it said.
The group added the proceed will be utilised for repayment of bank borrowing, working capital and expenses related to the proposed disposal.
The original cost of investment in the properties was approximately RM25.79 million and the disposal consideration was arrived at on a willing-buyer willing-seller basis.
“This is after taking into consideration the market value of the subject properties as appraised by valuer Nawawi Tie Leung Property Consultants Sdn Bhd, appointed by Rex Canning of RM40 million as at Oct 5, and RM41.8 million represents a premium of RM1.8 million or approximately 4.50% to the market value,” Rex said.
