PETALING JAYA (July 9) – Sapura Industrial Bhd (SIB) has entered into a Sale and Purchase Agreement (SPA) to dispose of a vacant industrial land parcel in Ayer Keroh, Melaka, for RM10.48 million in cash, as part of its strategy to unlock the value of non-core assets and redeploy capital into future business expansion.

The proposed disposal was announced via Bursa Malaysia and involves the sale of the property to Loongsen Plastics (M) Sdn Bhd.

Disposal of Long-Held Industrial Asset

The property is located in Mukim Bukit Katil, Ayer Keroh, Melaka Tengah, and comprises a vacant industrial land parcel measuring approximately 2.163 hectares.

Key details of the property include:

• Location: Mukim Bukit Katil, Ayer Keroh, Melaka.
• Land size: Approximately 2.163 hectares.
• Tenure: 99-year leasehold.
• Lease expiry: 22 October 2073.
• Sale consideration: RM10.48 million, payable entirely in cash.

The transaction will be conducted on an "as is where is" basis, subject to the fulfilment of several conditions outlined in the Sale and Purchase Agreement.

Strategic Shift from Expansion Land to Capital Recycling

According to the board, the land was originally acquired around 25 years ago to support future expansion of the company's manufacturing operations in Melaka.

However, as the company's operational requirements have evolved, management now prefers to focus future expansion in locations that are closer to its customers and manufacturing network.

As a result, the board believes this is an appropriate time to monetise the asset and realise its capital appreciation after holding it for more than two decades.

Unlocking Value for Future Growth

Rather than retaining an underutilised property, SIB intends to convert the land into liquid funds that can be deployed more productively.

The proceeds are expected to support:

• Future operational requirements.
• Expansion into more strategically located manufacturing areas.
• Better capital allocation.
• Strengthening the group's overall financial flexibility.

This reflects a broader corporate strategy of recycling non-core assets to improve operational efficiency and long-term shareholder value.

Payment Structure

The total purchase consideration of RM10.48 million will be settled entirely in cash through several payment stages.

The purchaser will pay:

• 2% earnest deposit, already placed with escrow solicitors.
• 3% stakeholder payment to cover Real Property Gains Tax (RPGT).
• 5% additional deposit upon execution of the SPA.
• Remaining 90% balance within 90 days after the agreement becomes unconditional.

Should additional time be required, the purchaser may obtain an automatic 30-day extension by paying interest at 8% per annum on the outstanding balance.

Conditions Before Completion

Completion of the disposal remains subject to several conditions precedent, including:

• Approval from the relevant Melaka state authorities for the transfer of ownership.
• Approval for creation of a legal charge if financing is required by the purchaser.
• Termination of the existing tenancy agreement.
• Delivery of vacant possession of the property by the current tenant.

These conditions are required to be fulfilled within six months from the signing of the SPA.

Once completed, Sapura Industrial must deliver vacant possession of the land within three working days after receiving full payment.

Expected Completion

Barring unforeseen circumstances, the company expects the proposed disposal to be completed during the first half of the financial year ending 2028.

Sapura Industrial has indicated that further announcements will be made should there be any material developments regarding the transaction.

Why This Disposal Matters

Unlike many property transactions aimed at acquiring strategic assets, this disposal reflects prudent capital management.

The land has remained in the company's portfolio for approximately 25 years without being utilised for its original expansion purpose. Instead of allowing the asset to remain idle, management is choosing to realise its accumulated value and redirect the proceeds towards business activities that are expected to generate stronger operational returns.

The move also demonstrates how manufacturing companies are increasingly reassessing legacy property holdings to improve capital efficiency and align investments with evolving operational needs.

Key Takeaways

Several important insights can be drawn from this transaction:

• Sapura Industrial is disposing of a long-held industrial land parcel in Melaka for RM10.48 million after approximately 25 years of ownership.
• The land was originally acquired for factory expansion but is no longer aligned with the group's current operational strategy.
• Management intends to recycle capital from a non-core asset into future manufacturing expansion closer to its customer base.
• The disposal improves financial flexibility by converting an underutilised property into cash that can support more productive investments.
• The transaction highlights the importance of active asset management, where companies periodically review property holdings to maximise shareholder value rather than retaining idle assets indefinitely.
• If completed as planned, the disposal will strengthen Sapura Industrial's ability to pursue future growth opportunities while maintaining a more efficient balance sheet.