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Saturday, November 3, 2007

Country Heights in property sale talks

By New Straits Times

The earliest possible date to conclude the sales of Malaysia International Exhibition and Convention Centre, and the Mines Waterfront Business Park is June 2008, a source says

COUNTRY Heights Holdings Bhd (CHHB) is in talks with several local and foreign parties for the disposal of two remaining components identified for sale, to help the company bounce back to profitability.

CHHB had identified three properties to sell that will wipe out its debt - the Mines Shopping Fair, Malaysia International Exhibition and Convention Centre (MIECC) and the Mines Waterfront Business Park.

In August, the Mines Shopping Fair was sold to Singapore's CapitaLand Ltd for RM432 million, from which CHHB will make an estimated gain of RM102 million.

This single sale has helped improve gearing to 0.6 times from 1.5 times and reduced interest rate on loans by half from RM50 million annually.

"Serious efforts are being made to really bring down gearing to a minimal level," a source told Business Times.

"CHHB has been receiving enquiries and offers from time to time for the exhibition centre and the business park. The earliest possible date when the deals are likely to be concluded is June 2008," the source added.

In June, the company announced that it plans to dispose of assets with an estimated market value of RM800 million to help wipe out debts and reverse its losses for the year ending December 31 2008.

Based on a valuation done four years ago, the net book value of Mines Waterfront is RM100.68 million and MIECC RM211.57 million.

However, it is believed that CHHB is seeking at least RM250 million for the MIECC and RM100 million on the first phase of the Waterfront Business Park.

"If they are able to fetch this amount or more, they will be able to bring their gearing level to zero," the source said.

The three properties, held by East Vision Leisure Group Sdn Bhd, have been pledged as security for a RM489 million loan.

CHHB managing director Tan Sri Lee Kim Yew has said that both the shopping centre and business park are profitable but the exhibition centre is not.

Lee wants to expedite the sales as its total debt as at end of March was RM838 million or 1.5 times its shareholders' equity of RM566 million.

Over the past 10 years, CHHB has paid over RM50 million just on interest from its borrowings. Last year, it made a group net loss of RM32.69 million on the back of RM213.17 million in revenue.

For the half-year ended June 30 2007, CHHB made RM200,000 in profit on the back of RM120.32 million in revenue. This compares to a net loss of RM19.99 million and a revenue of RM98.36 million in the previous corresponding period.

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