Struggling property developer Ivory Properties Group Bhd has opted to sell a commercial building in Penang for RM18 million to address its mounting financial challenges. The company, currently classified under Bursa Malaysia’s PN17 category for financially distressed firms, disclosed that the proceeds from The Birch House sale will primarily settle overdue bank loans. Bank Islam Malaysia Bhd had already taken legal action against the developer after loan defaults, with the case now transferred to Penang High Court for summary judgment proceedings.
The decision to offload this non-core asset comes as the property’s rental income proved insufficient to meet loan obligations. Ivory Properties expects to net approximately RM7.28 million from the transaction, with RM10.5 million earmarked for immediate debt repayment and the remaining RM7.5 million allocated for operational expenses. The sale, anticipated to conclude by Q3 2024, represents a critical step in the company’s efforts to stabilize its financial position.
Ivory Properties’ troubles escalated in August 2022 when auditors KPMG PLT raised concerns about its viability following a RM79.51 million net loss for FY2022. The group’s liabilities surpassed current assets by RM60.22 million, with financial strain largely attributed to its subsidiary Ivory Gleneary Sdn Bhd. The subsidiary faced RM73.6 million in liquidated damages related to delayed Penang Times Square projects and accumulated losses reaching RM74.5 million by mid-2024.
As part of its restructuring strategy, Ivory Properties initiated winding-up proceedings for the troubled subsidiary last September. The group’s latest financial reports reveal a precarious cash position, with only RM1.69 million in reserves against RM58.01 million in short-term debt. This property sale marks a crucial attempt to address its financial obligations while navigating the challenging PN17 rehabilitation process.