Eastern & Oriental Bhd (E&O) is selling its subsidiary E&O Express Sdn Bhd. E&O Express Sdn Bhd owns and runs the Lone Pine Hotel in Penang. Pix source: Lone Pine Hotel.

KUALA LUMPUR: Eastern & Oriental Bhd (E&O) is selling subsidiary E&O Express Sdn Bhd, which owns and operates the Lone Pine Hotel in Penang, for RM85 million.

A share sale agreement had been inked with Langkawi Saga Shopping Centre Sdn Bhd and Lubritrade Trading Pte Ltd, said E&O, in its filing to Bursa Malaysia today.

It expects to realise an estimated net gain on disposal of RM23.3 million.

“The proposed sale is in line with the group’s strategy of strengthening the balance sheet via realising cash resources which can then be deployed in identified projects and investments to maximise the returns of the E&O group and/or for repayment of borrowings,” E&O said.

The bulk of the sales proceed will be used for working capital and repayment of bank borrowings, while RM1.14 million will be used for estimated expenses with regards to the proposed sale.

E&O said RM21.84 million will be used for settlement of a redemption sum owed by E&O Express to an unnamed local financial institution, while RM11.09 million will be to settle a loan E&O Express took from E&O.

E&O said the sale consideration was arrived at on a “willing buyer and willing seller” basis after taking into consideration the fair valuation of the Lone Pine Hotel, which is located in Batu Feringghi.

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