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Covid-19: Hatten Land unit sells Melaka land at loss to fund operations and repay borrowings
A Hatten Land subsidiary is set to sell a plot of land in Malaysia for RM28.5 million (S$9.35 million), below its book value of RM32 million, which will go towards funding the group's operations and repayment of borrowings.
Measuring 3.781 ha, the plot in Melaka was to have been developed into an integrated mixed development that will comprise a shopping mall, cineplex, convention hall and auditorium, meeting rooms, a hotel block and a serviced apartment block.
Hatten Land has yet to commence development of the project, so there will be no penalties. However, the group is expected to write off the property development costs capitalised for the project amounting to about RM5.7 million as at Feb 29.
Notwithstanding the losses, the board had decided that the sale was in the best interests of the company, as an opportunity to raise funds for operations and repayment of borrowings in light of the current economic environment.
The group's headquarters, offices and sales galleries in Malaysia have been closed as part of the country's movement control order - in effect since almost a month ago - to limit the community spread of the novel coronavirus. Construction works for the group’s ongoing projects across the Causeway have also ceased.
These are likely to take a toll on Hatten Land's financial results for the year ending June 30.
The board had looked at similar land sales in the current market as a reference and found the price for its plot to be "sufficient", as "there may be limited number of buyers in the market and the ability to complete the deal in a relatively short period of time is crucial to unlock its value to the company".
The buyer is a company that has been incorporated in Malaysia in 2004, and which is principally engaged in manufacturing, wholesaling, exporting car spare parts and providing car-related services.
Shares of Hatten Land closed unchanged at S$0.069 on Thursday.