The disposal of an 8.05-hectare freehold land in the Cameron Highlands for RM15 million by Fitters Diversified Bhd is part of an ongoing initiative to rationalise its assets and focus its resources on more promising areas of its operations.

KUALA LUMPUR (Oct 26): Fire protection equipment supplier Fitters Diversified Bhd is disposing of an 8.05-hectare freehold land in Cameron Highlands for RM15 million, with an estimated gain on disposal of RM12.35 million.

The disposal of the land to Cameron Highlands Floriculture Sdn Bhd is part of Fitters’ ongoing initiative to rationalise its assets and focus its resources on more promising areas of its operations, the group said in a filing with Bursa Malaysia on Thursday.

It added that proceeds from the disposal are earmarked to be used for the group's operational capabilities by addressing "critical facets" of its working capital.

The allocation will support various operational needs, including repayment of bank borrowing and financial commitments such as settling outstanding obligations to creditors, said Fitters.

"Moreover, it will be instrumental in covering day-to-day administrative and operational expenses, including the high exchange rate in US dollars in procurement of vital raw materials and meeting routine expenditures such as rental and utilities and any anticipated costs arising from the proposed disposal," the group added.

Fitters said the disposal is expected to be completed by the third quarter of 2024.

It is worth noting that Fitters had recently incurred a huge loss of RM26.19 million after making a bad investment in Computer Forms (M) Bhd (CFM).

Fitters had acquired a 4.54% stake in CFM for RM26.44 million and 4.78% of CFM’s warrants for RM8.33 million on March 7 and 8, which it sold more than a week later, after a sharp fall in the market prices of CFM's shares and warrants.

The acquisition by Fitters into CFM was deemed a related-party transaction by Bursa Malaysia — as Fitters executive director Hoo Swee Guan is also an executive director of CFM while independent non-executive directors Wong Kok Seong and Kho See Yiing also sit on the board of CFM as a senior independent non-executive director and independent non-executive director respectively — which brought about the need for the independent adviser’s recommendation.

Independent adviser to Fitters’ minority shareholders, Wyncorp Advisory Sdn Bhd, in September criticised the acquisition, saying it was not reasonable and detrimental to non-interested shareholders.

Wyncorp Advisory further said the related-party acquisition in March is premature, not substantiated by prevailing fundamentals and involves a high degree of investment risks.

However, Wyncorp Advisory went on to say that the decision by Fitters to proceed with the disposals is a reasonable and appropriate measure at that point in time to prevent the company from incurring further losses.

Fitters shares closed unchanged at 3.5 sen with a market capitalisation of RM86.91 million.

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