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Thursday, July 23, 2009

Bina Goodyear to use RM9m of land sale proceeds to reduce debt

SHAH ALAM: Bina Goodyear Bhd will use about RM9mil of the RM27mil to be raised from the sale of its 8.6-acre land in Bandar Sri Damansara to part-pay borrowings which stand at about RM100mil currently.

Senior general manager Lawrence Lau said the land disposal and cancellation of its proposed development project were part of the company’s plan to consolidate its non-income-generating assets.

“We believe the market is not good enough for the kind of development we were looking at. At such a time it could be a bit tough to have good take-up rate,” he said after the company EGM yesterday.

Shareholders yesterday approved the proposed sale to Green Heights Developments Sdn Bhd for RM27mil.

Bina Goodyear had earlier proposed a residential development comprising three bungalows with a sales value of RM2mil to RM2.5mil each, and 46 semi-detached bungalows at RM1.3mil to RM1.6mil each.

Due to the softening property market, Lau believed it was pointless to proceed with the project only to hold on to it later on.

“We believe the proceeds from the land sale can be more efficiently utilised,” Lau said, noting that the proposed disposal was expected to be completed by the third quarter of this year.

Of the proceeds, about RM16.5mil will be used for working capital.

Shareholders’ approval for the proposed development had also lapsed some time ago, said Lau.

Meanwhile, the group was optimistic of returning to the black in the financial year ending June 30, 2010.

“We believe prices of raw materials will stabilise and this will be the major basis for our turnaround,” said Lau.

To date, its order book of on-going local construction jobs is valued at RM750mil, of which 40% to 50% has been completed.

This will keep the group busy for another six to nine months.

“We expect to secure one or two projects, mainly construction jobs, within the next six months,” Lau said, adding that the group was bidding for jobs worth RM50mil to RM300mil.

Bina Goodyear posted a net loss of RM4.7mil on revenue of RM91.3mil for the third quarter ended March 31.

By The Star

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