BOUSTEAD Holdings Bhd (BHB), which is disposing of the Royale Chulan Bukit Bintang Hotel in Kuala Lumpur to Singapore-listed Hotel Royal Ltd for RM197 million in cash, expects to realise an estimated gain of RM92 million from the sale. 

In a filing with Bursa Malaysia today, BHB said this translated to about 4.5 sen per share.

BHB’s indirect subsidiary, Boustead Hotels & Resorts Sdn Bhd, today inked an agreement to sell the 418-room four-star hotel to Hotel Royal subsidiary Every Room A Home Sdn Bhd.

A spokesman for BHB said in a statement today that the disposal of this property formed part of the Boustead group’s overall plan to return to profitability by way of divesting non-strategic assets.

The hotel, located on Jalan Bukit Bintang, is facing increased competition within the Golden Triangle of Kuala Lumpur as well as online platforms such as Airbnb. This hasresulted in its relatively low occupancy rate of 52% in 2018 versus the average occupancy rate of hotels within the Klang Valley of about 74% , BHB said.

The company said that a refurbishment exercise would also be needed for the ageing property to remain attractive and competitive.

The prime location of the Royale Chulan Bukit Bintang Hotel enabled the group to dispose of the hotel at a premium over the net book value, BHB said. 

The proposed disposal is, however, conditional on, among others, the buyer obtaining the approval of the Economic Planning Unit of the Prime Minister’s Department and the approval of the Federal Territory of Kuala Lumpur Land Executive Committee as well as completing all conditions and listing requirements imposed by the Singapore Exchange Securities Trading Ltd.

The proposed sale is expected to be completed by July 2019.

Meanwhile, Boustead Holdings Bhd today announced the revision of terms of contract for the supply of four littoral mission ships to the Royal Malaysian Navy.

In a filing with Bursa Malaysia, BHB said the government agreed that all four vessels would be built and delivered in China for a revised contract price of RM1.048 billion.

BHB was referring to an earlier announcement with regard to the signing of a contract between the Defence Ministry and Boustead Naval Shipyard Sdn Bhd, a subsidiary of BHB, for the supply of four littoral mission ships in collaboration with a partner shipyard in China.

Under the initial contract, two vessels would be built and delivered in China and two built and delivered in Malaysia for a total sum of RM1.17 billion. – Bernama, March 15, 2019.