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Sinjia Land to sell North Dakota hotel at a loss of S$1.58 million

CATALIST-LISTED hostel operator Sinjia Land inked a deal on Aug 6 to sell a property in the American city of Killdeer, North Dakota at a loss, according to a bourse filing on Friday night.

Sinjia Land has agreed to sell the property, now run as a Barons Lodge Hotel, to third-party US buyer Trinity Investments for US$750,000.

The price tag is well below the S$2.54 million book value - which would result in a disposal loss of about S$1.58 million. But Sinjia Land noted that it came into the property as payment for a convertible loan, and has tried to sell the project to recover its investment.

“The proposed disposal will enable the group to realise the value of the property and thereby free up cash,” the company said, while adding that it does not have the resources to monitor, manage and operate the development in North Dakota. Proceeds will be used for general working capital.

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The city of Killdeer was home to about 1,150 people, as at mid-2018, according to the most recent US Census Bureau estimates.

Sinjia Land also said that it has been hunting for potential buyers since June 2018, with the help of property agents, adding that it managed to find a taker only after lowering the price. The eventual transaction was brokered by a US broker, Home and Land Company.

The group disclosed that, had the sale gone through on Jan 1, 2018, pro forma loss per share would have widened from two Singapore cents to 2.9 Singapore cents.

Meanwhile, if the deal were done on Dec 31, 2018, pro forma net tangible asset per share would drop from 6.52 Singapore cents, to 5.62 Singapore cents.

Sinjia Land last posted a net loss of S$1.34 million for the six months to June 30, 2019, widening from S$1.22 million in the same period the year before.

The planned Barons Lodge Hotel sale depends on conditions such as a 14-day due diligence study by Trinity Investments, to inspect the site, as well as the buyer securing final financing.

Sinjia Land is also seeking a waiver from the Singapore Exchange’s requirement to get shareholder approval for the deal, which may be deemed a “major transaction”.

It plans to get undertakings from controlling shareholders China Infrastructure Global Investment Capital and CoProsperity Investment (International) - which together hold a 32.19 stake - to support the deal.