PENANG-BASED GUH Holdings Bhd has disposed of its land in Suzhou, China, for CNY195.0 million (about RM119.8) million following a compulsory acquisition for urban redevelopment by the local state government after protracted negotiations.
The Chinese unit of the printed circuit boards (PCBs) manufacturer entered into a compensation agreement with the local state government’s outfit on Feb 13.
In an exchange filing yesterday (Feb 13), GUH said its wholly-owned subsidiary GUH Circuit Industry (Suzhou) Co Ltd entered into the agreement with the Suzhou High-tech Zone Shishan Business Innovation District Management Office, a unit of the Government of the People’s Republic of China.
The land, located at 588 Changjiang Road, was acquired by the authorities as part of an urban redevelopment plan.
On the utilisation of the proceeds, GUH said it has earmarked RM15 million to acquire new business or assets to expand and diversify the revenue stream and improve the group’s profitability.
It has also allocated up to RM55 million for future land acquisitions to increase its landbank, particularly in Selangor.
Explaining the rationale for the settlement, GUH said the proposed disposal arose as a result of the Suzhou Government announcing their plans to urbanise the Suzhou New District, including the re-zoning of industrial areas to commercial and/or residential areas.
Subsequent to the announcements in 2020, GUH Suzhou faced workers’ strikes in September 2020 and had to cease operations until Oct 6, 2020 when manufacturing operations were resumed. Thereafter, GUH Suzhou continued its manufacturing operations at a minimal capacity until operations ceased completely in December 2021.
In July 2024, it said the local Chinese authorities had sought to take possession of the land under the “Law of Land Administration of the People’s Republic of China” and the “Law of the People’s Republic of China on the Administration of the Urban Real Estate”.
It said the proposed disposal will allow the group to recoup its investment (for which the land use tenure has a remaining lease term of 22 years) and completely exit its PCB venture in Suzhou.
It added the land was not currently charged to any financial institutions and the compensation amount was to be used progressively for new investment, future business expansion, working capital and repayment of debts.
GUH counter closed unchanged at 37.5 sen yesterday, valuing the company at RM104 million. Its 52-week high/low was 42 sen/29 sen. — TMR
