SINGAPORE - Mirach Energy has taken another step in its planned diversification, inking a conditional agreement to buy a majority stake in Malaysian plantation company RCL Kelstar Sdn Bhd for 21 million Malaysian ringgit (S$7.07 million).
The cash consideration will give Mirach a 70 per cent interest in RCL, the company said on Wednesday evening, adding that it already got its shareholders' mandate for the transaction in a June vote.
The investment - first announced in February after a memorandum of understanding was signed - is part of Mirach's property and construction diversification strategy to bring the company back into the black. Mirach most recently reported an unaudited first-quarter net profit of US$147,000 for the three months to March 31, reversing a US$1.04 million loss in the same period the year before.
RCL is developing a multi-storey project jointly with the Kelantan State Economic Development Corporation, according to a previous Mirach announcement. An independent valuation report by Nasir, Sabaruddin & Associates had pegged the market value of the project's 5,000 acres of land at 55.58 million ringgit including timber trees, with a rental value of 28.71 million ringgit.
Mirach said that the price tag was reached after negotiations on arms' length, willing buyer, willing seller basis. The board also took into account the prospects of the project, how it fared in comparison with a property in East Malaysia, and the financial position of RCL, it said.
Completion of the sale will take place once the vendors - RCL directors Kho Ah Tee and Lee Lip Khang - have been paid in full, which must happen within six months of the agreement.
Mirach recently placed out 56 million shares of its own, at S$0.10 apiece - including some 4.4 million shares to Tan Chin Hock, who introduced RCL to the company.