A wholly-owned subsidiary of OUE LJ3 Healthcare Limited 5WA has entered into a sale and purchase agreement to dispose of a plot of vacant land in Kuala Lumpur for RM125.0 million ($35.6 million).
In a May 15 announcement, the company says it expects to receive net cash proceeds of approximately RM120.3 million after fees. The sum will be used for working capital purposes.
The proposed disposal of the land at Pajakan Negeri 46289, Lot 84 Seksyen 63, Town and District of Kuala Lumpur, Federal Territory of Kuala Lumpur is part of the company’s ongoing strategic initiatives to enhance its capital structure to support its business transformation, says OUE Healthcare.
Its plans to transform the business began with an injection of shareholder loans from OUE Limited
This was followed by a private placement to ITOCHU Corporation and a rights issue in 2018, culminating in a strategic recapitalisation that converted the OUE shareholder loans and accrued interests of $189.6 million into convertible perpetual securities, as well as the divestment of 12 nursing homes in Japan to First REIT AW9U in exchange for First REIT units.
OUE Healthcare CEO Yet Kum Meng says the commitment to optimising capital structure aligns with their broader business transformation strategy. “By unlocking value from non-core assets, we bolster our capital efficiency and flexibility, and reinforce our dedication to advancing our core healthcare service businesses in Asia, which positions us for sustainable growth in the dynamic healthcare landscape.”
See also: OUE Healthcare's Patmi surges 83% in FY2023, but no dividend declared because of cash flow needs
OUE Healthcare is the healthcare arm of the separately-listed OUE Limited, a real estate and healthcare group based in Singapore.
OUE Healthcare is a Singapore-incorporated company and has been listed on the Catalist board since July 2013.
OUE Healthcare is the largest unitholder of First REIT, Singapore’s first listed healthcare REIT, holding a direct stake of about 33% and a 40% stake in its manager, First REIT Management Limited.
See also: OUE Healthcare expands footprint in China but what’s next for First REIT?
In February, OUE Healthcare announced an 83% surge in net attributable profit to shareholders for FY2023 ended Dec 31, 2023 to $8.05 million.
However, the company did not declare a dividend for FY2023, citing cash flow requirements.
Shares in OUE Healthcare closed flat at 2.6 cents on May 15.
