Senheng New Retail Bhd has suggested paying RM75.8 million in cash for a plot of land and buildings being utilised as a central distribution centre (CDC).
Senheng said in a filing with Bursa Malaysia that its wholly-owned subsidiary Senheng Electric (KL) Sdn Bhd (Senheng KL) has engaged into a sale and purchase agreement for the proposed acquisition with SDM Assets III Sdn Bhd.
The transaction includes a freehold industrial land parcel in Klang, Selangor, as well as a single-story warehouse facility with three-story office space, as well as auxiliary structures and an external structure built on it.
Senheng KL is now renting the asset from the vendor and using it as the CDC for Senheng and its subsidiaries.
Senheng stated that the acquisition will result in considerable yearly gross rental savings for the group of RM4.2 million.
The CDC, designed by SDM and leased to Senheng since 2020, is critical to the group’s supply chain management, optimising logistics and improving the customer experience.
“The CDC is a key enabler of Senheng’s omni-channel shopping experience, enabling us to seamlessly serve our online and offline customers throughout Malaysia, while ensuring timely product deliveries and diverse offerings within our physical stores,” Lim Kim Heng, executive chairman, said in a statement.
Furthermore, he went on to say that the CDC acquisition increased its operational dependability, complimenting its ongoing Territory Champion store development and renovation strategy.
“It also supports our latest online-merge-offline initiative that provides online customers personalised service by sales personnel from across the country, as well as seamless delivery and in-store pick up options.”
The CDC has a total built-up area of 200,035 square feet and consists of a warehouse, offices, and auxiliary buildings on 6.6 acres of freehold industrial land.
Senheng will obtain RM45.8 million in bank borrowings and reallocate RM30 million from its initial public offering (IPO) originally allocated for its Territory Champion expansion strategy to finance the RM75.8 million CDC acquisition.
Lastly, the transaction is expected to close in the fourth quarter of 2023.
As of June 30, the group has a RM117.7mil unutilized allocation from its IPO proceeds for the Territory Champion plan.
After reallocating the RM 30 million originally earmarked for store purchases, the remaining allocation will be reduced to RM87.7 million.
