Eden's major shareholder proposes land transfer to settle RM45.65m debt owed to company

KUALA LUMPUR (April 25): Eden Inc Bhd’s major shareholder Tan Sri Abd Rahim Mohamad is proposing to settle a RM45.65 million debt his company owes Eden by transferring the ownership of a 2.4 million sq ft (about 55 acres) leasehold land to the listed entity.

Abd Rahim — the father-in-law of entrepreneur Datuk Fakhri Yassin, son of former deputy prime minister Tan Sri Muhyiddin Yassin — is the sole owner of Zil Enterprise Sdn Bhd (ZESB), which owes Eden the sum mentioned. ZESB has a direct 6.73% stake in Eden and another 8.67% indirect stake via Serata Padu Sdn Bhd. This gives Abd Rahim control of an indirect 15.4% in Eden.

ZESB is also the owner of the industrial plot in the Mukim of Sungai Karang, Kuantan, valued at RM50.5 million — as appraised by an independent valuer — that Abd Rahim wants to transfer to Eden. There are 72 years left to the land’s lease, which will expire on Oct 28, 2096. ZESB’s original investment in the land was RM549,700, made in October 1997.

On transfer of the land to Eden’s unit Stratavest Sdn Bhd (STV), Eden will pay ZESB the balance of the land value, net of the debt, that amounts to RM4.85 million, in cash.

Eden’s major shareholder proposes land transfer to settle RM45.65m debt owed to company

Eden acquired STV from Serata Padu in August 2003 for RM123.33 million by issuing 123.33 million shares representing the 8.7% interest in Eden. In that same year, Eden bought 540.67 acres of industrial land in Kuantan, Pahang from ZESB for RM76 million, which was paid by the issuance of irredeemable convertible unsecured loan stocks.

Prior to those acquisitions, STV had advanced a series of payments, at an interest-free basis, to ZESB and its 52%-owned unit Serve Vest (M) Sdn Bhd for working capital. After that, Eden consolidated the debts owed by ZESB (RM10.87 million) and Serve Vest (RM11.36 million) into STV, which totalled RM22.23 million, with no fixed repayment period.

Eden then imposed annual interests on the debts from 2002 to 2018, with interests accrued amounting to RM38.69 million. The sum owed by Serve Vest was also reassigned to ZESB, making ZESB solely liable for the total RM60.92 million debt. Over the years, ZESB has managed to trim RM24.28 million of the amount owed, including fully repaying the principal owed — leaving RM45.65 million of interest costs.

Eden said the recoverability of the debt had been highlighted by its independent auditor in an October report last year as a “key audit matter”, as it had been long outstanding, while the interest-bearing principal had already been fully repaid, hence it does not contribute further to the group’s earnings.

By recovering the debt through the land transfer, Eden said it will strengthen its overall financial position as its non-current assets are expected to rise to RM292.1 million from RM241.6 million as at June 30, 2023, and grow its landbank to 416.63 acres from 361.53 acres.

The group may also benefit from the land’s capital appreciation from commercial and industrial developments, it added, as well as the development of the East Coast Rail Link nearby.

Free warrants, ESOS

Eden is also planning to issue free warrants to reward its shareholders, and to set up a five-year employee share option scheme (ESOS) that will involve up to 15% of its total issued shares.

It intends to issue up to 252.68 million free warrants on the basis of one warrant for every two Eden shares held, at an entitlement date to be fixed. The exercise price for the warrants is yet to be determined.

At market close on Wednesday, Eden shares settled half a sen or 3.13% higher at 16.5 sen, giving the group a market capitalisation of RM83.38 million.