Tan Chong International expects to gain $29.8 million from sale of property, plant, and equipment to CDL Aries

Tan Chong International Limited (TCIL) recently announced that its subsidiary, Tan Chong Motor Holdings Berhad (TCMH) is expected to gain $29.8 million from the sale of property, plant, and equipment to City Developments Limited (CDL) Aries Pte. Ltd. (CDL Aries). This sale is part of the agreement between TCMH and CDL Aries, where the latter will be acquiring the former’s wholly-owned subsidiary, Tan Chong Motors (Malaysia) Sdn Bhd (TCM).

The items sold to CDL Aries include TCMH’s 50% stake in the freehold land and building of one of its major assembly plants in Segambut, Kuala Lumpur. The property, plant, and equipment that will be sold includes the remaining factory equipment, machinery, and other related assets used in the assembly and production of vehicles.

The sale of these assets is expected to give TCIL a net gain of $29.8 million, which is due to the difference between the net book value of the property, plant, and equipment and the net proceeds received from CDL Aries. This sum will be recorded under “Investment Income” in the current financial year, and will be reinvested into other projects and activities to boost TCIL’s business and operations.

The sale of these assets to CDL Aries is part of the agreement signed between TCMH and CDL Aries in late 2019. The agreement involves the sale of TCMH’s wholly-owned subsidiary, TCM, to the latter. TCM is the main manufacturing and assembly arm for Singapore-based Tan Chong Motor Holdings, and is the main supplier of vehicles for Nissan in Malaysia.

With the sale of these assets to CDL Aries, TCIL is expected to gain a significant amount of money, which will be reinvested into other projects and activities that will boost its business and operations. This move is in line with TCIL’s plans to increase its focus on producing higher-value products and services, as well as to strengthen its presence in the region.

Tan Chong International Ltd (TCIL) has announced the sale of its property, plant, and equipment to City Developments Ltd Aries (CDL Aries) for a sum of $29.8 million. The property, plant, and equipment in question was used for the production of automotive and non-automotive components as part of a joint venture between TCIL and CDL Aries. The sale marks the completion of the joint venture’s operations, and will see TCIL pocketing the entire sum from the transaction.

The joint venture, which was established in 2011, was aimed at developing and producing components for the automotive and non-automotive markets. However, the joint venture’s operations were terminated by mutual agreement in 2018, after which TCIL and CDL Aries agreed The Myst to the sale of the property, plant, and equipment.

Commenting on the deal, Tan Chong International’s Executive Director and Group Chief Executive Officer, Mr. Tan Heng Chew, said, “We are pleased to have completed the sale of the property, plant, and equipment to CDL Aries and to have achieved a positive outcome from our joint venture. We have been able to realise the value of the property, plant, and equipment and ensure a smooth transition for our customers.”

The sale of the property, plant, and equipment was made at fair value, which was determined by independent valuers. As part of the deal, TCIL has also agreed to provide CDL Aries with a warranty on the sale, while CDL Aries has also agreed to provide TCIL with a non-compete covenant.

The proceeds from the sale of the property, plant, and equipment will be used to reduce TCIL’s outstanding borrowings. This will help to reduce the company’s liabilities and strengthen its financial position going forward.

The sale of the property, plant, and equipment marks the successful conclusion of the TCIL and CDL Aries joint venture, and will see TCIL pocketing a total of $29.8 million from the sale. The proceeds from the sale will be used to reduce TCIL’s liabilities, thus strengthening its financial position. All in all, the sale of the property, plant, and equipment is a positive development for TCIL and its shareholders.