KUALA LUMPUR (July 15): Malakoff Corp Bhd is buying a parcel of leasehold industrial land in Klang from Media Prima Bhd for RM25 million.

The land deal came roughly two weeks after Media Prima announced its plan to buy back the freehold property in Bangsar where its Balai Berita headquarters is located from Permodalan Nasional Bhd (PNB) for RM156.4 million. The price tag is higher than the RM118.7 million tag at which Media Prima sold to PNB in 2018.  

The two companies have a common shareholder, Tan Sri Syed Mokhtar Al-Bukhary.

Hence, the latest land deal is deemed a related party transaction, as Malakoff is an 18.37%-owned associate company of MMC Corp Bhd, the flagship of Syed Mokhtar, who is also a major shareholder of Media Prima holding a 31.9% stake.

In a statement, Malakoff said that its wholly-owned unit Alam Flora Environmental Solutions Sdn Bhd (AFES) had signed a sale and purchase agreement with Media Prima’s wholly-owned unit The New Straits Times Properties Sdn Bhd for the land purchase.

The land measures 23,370 sq m, and contains two single-storey detached factory warehouses in Kawasan Perindustrian Bandar Sultan Sulaiman, Klang.

The purchase will be funded through internally-generated funds.

The power producer, which bought the waste management company Alam Flora Sdn Bhd three years ago, said the tract purchased will allow AFES to develop a recovery facility as an offsite facility to handle various types of waste and to expand its environmental business segment in line with its strategic plan.

Malakoff took over Alam Flora from DRB-Hicom Bhd, another flagship of Syed Mokhtar, for RM944 million cash in 2018.

It explained that the land was a good recovery facility as it is located in an industrial zone, is compatible with the surrounding land use in accordance with the Department of Town and Country Planning Malaysia requirements; and has a buffer of more than 500 meters to the nearest sensitive receptors.

On the other hand, Media Prima said in its filing with Bursa that the land sale is expected to give rise to a one-off net gain of RM12.09 million.

Media Prima noted that the rationale is to reduce its bank borrowings, allowing it to preserve cash reserves towards meeting the cash flow requirements of its business operations.

“The proposed disposal is in line with the Group’s strategy in disposing of properties located in non-strategic locations without immediate development potential,” Media Prima said.

Media Prima expects its borrowings to decline to RM100.85 million, from RM125.49 million as of Dec 31, 2020. Its gross gearing ratio would decline to 0.49 times, from 0.54 times, while its net gearing ratio would decline to “not meaningful” levels, from 0.01 times, the bourse filing added.