29 December 2014

Ireka proposes to acquire land worth RM21.8 mil in Seremban

  29 December 2014

Ireka Corporation Bhd (Ireka) has proposed to acquire a part of a freehold land parcel measuring 21.52 acres (8.71 hectares) in Senawang, Seremban, Negeri Sembilan for RM21.8 million.
The company in a filing to Bursa Malaysia on Dec 26 said its wholly-owned subsidiary Ireka Engineering and Construction Sdn Bhd (IECSB) had on Dec 26 entered into a sale and purchase agreement with the land owner for the land acquisition.

Ireka explained that the land will be used for the construction of a shopping centre.

Ireka added concurrent to the proposed land acquisition, IECSB has entered into a separate sale and purchase agreement with AEON Co (M) Bhd (AEON) for the disposal of the land, following obtainment of necessary approvals from the relevant authorities to allow the construction and operation of a shopping centre upon terms and conditions as stated in the AEON sale and purchase agreement.

Simultaneously, Ireka said IECSB has also entered into a construction agreement with AEON for the appointment of IECSB to construct a shopping centre together with a car park on the land, subject to the completion of the sale and purchase agreement and upon terms and conditions as stated in the construction agreement.

Meanwhile, Ireka believes the proposed acquisition is a good opportunity for the group to employ its capability as both a developer and design and build contractor for a large multi-national corporation like AEON.

Ireka noted the land is located in a prime commercial area in the town centre of Senawang and is served by a good network of roads including the Kajang-Seremban Highway (LEKAS) and the North-South Highway (PLUS).

Ireka observed that in connection with the proposed land acquisition and subsequent disposal to AEON under the AEON sale and purchase agreement, IECSB will be appointed as the main building contractor for the shopping centre by AEON, subject to terms and conditions under the construction agreement.

Going forward, Ireka foresees the proposed acquisition is expected to contribute positively to the earnings of the group for the financial year ending March 31, 2017.
The company estimated that the proposed acquisition is expected to be completed within 20 months from the date of the land owner sale and purchase agreement.

In a separate announcement, Ireka said AEON has agreed to purchase the shopping centre land from IECSB subject to obtainment of the authority’s approval with vacant possession and free from all encumbrances, caveats and other restraints.

The company added the disposal price of the shopping centre land shall be RM53.66 million and shall be paid by AEON.

Subsequently, it said the construction cost of the shopping centre shall be at an amount of RM203.14 million.

The company noted the construction works of the shopping centre shall be implemented over a period of approximately 23 months upon commencement of works.

Ireka forecast that based on the cost of the land acquisition of RM21.8 million and expected development costs to fulfill the obligations of IECSB under the AEON sale and purchase agreement, the expected gross profit from the proposed land disposal is approximately RM6.8 million.
Ireka explained the proceeds generated from the proposed disposal of the shopping centre land will be channeled towards working capital required for the group operations.

The company said earnings of the group is also expected to benefit from the execution of construction works under the construction agreement for the design and construction of the shopping centre.

Read more: http://www.theborneopost.com/2014/12/29/ireka-proposes-to-acquire-land-worth-rm21-8-mil-in-seremban/#ixzz3NHnxwIbu

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