Minetech eyes Perak land to diversify into property

KUALA LUMPUR: Quarry operator Minetech Resources Bhd (MRB) plans to buy four parcels of land in Perak to diversify its existing business to include property development.

In a filing with Bursa Malaysia, Minetech said it signed a conditional sale and purchase agreement yesterday with Glamour Heights Sdn Bhd to buy a 7,924 sq m parcel of vacant residential land in Kinta, Perak, for RM6 million cash.

The land is approved for a 21-storey mixed project, for which Minetech will be the main developer and Glamour Heights the co-developer, to assist in the construction of the Glamour Avenue project.

“The building plans for Glamour Avenue were approved by Majlis Bandaraya Ipoh on Feb 28, 2014. Based on current planning, the estimated gross development value (GDV) and the estimated gross development cost (GDC) of the project are RM76.97 million and RM68.99 million respectively, yielding an estimated profit of RM7.98 million to Minetech," said the group.

“As at the latest practicable date (LPD), Glamour Heights has commissioned preliminary works on the development including earthworks and relocation of sewerage pipelines," it added.

Glamour Avenue represents Minetech’s maiden venture into the property development industry. It expects to fund the buy using its internal funds and/or bank borrowings.

Minetech is also planning to buy two companies: Medium Visa Sdn Bhd (MVSB) and Harapan Iringan Sdn Bhd (HISB), for RM9.43 million and RM7.51 million respectively.

MVSB owns two parcels of adjacent leasehold land (Land A and Land B) in Bernam Timur, Perak, measuring 124,136.7 sq m. HISB  owns a 99,730 sq m parcel of leasehold land (Land C), also in Bernam Timur.

Land A and Land B are largely vacant industrial land adjacent to Land C (also a vacant industrial tract), located approximately 5km east of Tanjung Malim town centre.

Minetech intends to fund the acquisitions of MVSB and HISB using proceeds from its rights issue in 2014, subject to approval from its shareholders.

Minetech also proposed a revision of the intended use of its rights issue proceeds, from which it had raised RM49.86 million. As at the LPD, the group has used RM19.36 million. MRB plans to reallocate RM20 million of the rights issue proceeds, originally meant for the purchase of quarry sites, to fund its distribution of heavy machinery and working capital.

It remains interested in purchasing new quarry sites, but has yet to identify any viable target sites.

Minetech is also proposing to set up a share issuance scheme of up to 15% of its issued share capital at any one time during the duration of the scheme for eligible directors and employees of the group. It intends to utilise the proceeds arising from the exercise for its working capital.

The group said it expects the various proposals to be completed in the first quarter of 2016.

Thinking of investing in property in Perak?

This article first appeared in The Edge Financial Daily, on Oct 6, 2015.