Hai-O Enterprise Bhd has secured a loan worth RM20 million from the Bank of China to finance its acquisition of land and buildings in Kapar, worth RM45 million, from Bata (M) Sdn Bhd.
The RM25 million balance will be financed through internally generated funds.
The deal for the purchase of the land measuring 11.57ha, with eight buildings on it, is expected to be completed by the end of April. Bata is currently using the buildings as an office, warehouse and factory.
“We managed to get a very low interest rate, the lowest in the market,” said its group managing director Tan Kai Hee, without elaborating.
He was speaking to the reporters after extraordinary general meeting held in Kuala Lumpur yesterday. Shareholders approved the acquisition at the EGM.
“The deal is for the interest of the shareholder, and we make sure that their interests are well taken care off,” added Tan.
He said 40% of the land and buildings would be leased back to Bata and this would provide Hai-O with RM2.5 million worth of rental income annually.
The company will sign the tenancy agreement with Bata for three years, with an option to renew the tenancy.
Tan said the remaining 60% of the property would be used by Hai-O as warehouse, among others. He added that other plans for the land would be disclosed in the near future.
“It is a good buy, and we foresee a bright future (through the acquisition), and we will announce our plans for it once the deal is completed,” he said.
Meanwhile, Tan said the company is planning to expand its multi-level marketing, which contributed over 60% to the company’s turnover for the last financial year.
The multi-level marketing (MLM) division markets mainly health products, traditional medicines and water filters.
Tan said Hai-O has a strong foundation in MLM, and this division is expected to continue growing every year.
To boost its MLM division, Hai-O will be participating in an exhibition in Xian, China, next month.
“We will bring our products to the exhibition. I think there is a great opportunity for our company there,” said Tan.
Hai-O unit help China businessmen
Hai-O Enterprise Bhd is setting up a subsidiary to assist entrepreneurs from China planning to do business in Malaysia.
Speaking to the reporters after an extraordinary general meeting held yesterday in Kuala Lumpur, its group managing director, Tan Kai Hee, said the company currently has a division which assists entrepreneurs from China who are interested in doing business here.
He said the entrepreneurs can also set up a joint venture with Hai-O if they market similar products and services. However, he said, it was too early to estimate the number of China entrepreneurs who will be coming to Malaysia and the revenue Hai-O could generate from this new business venture.
On the company’s part, he said, Hai-O would participate in an exhibition in Xi’an City, China, and exhibit its products there.
Last month, it signed a business cooperation agreement with a Chinese company to explore business opportunities in the Muslim market in China.
“Over here, we need to open the door wider for more Chinese entrepreneurs to come in and do business,” said Tan, adding that the Malaysian government should relax certain regulations to encourage more Chinese business participation in the country.
Apart from assisting entrepreneurs, the company would also welcome industry experts, consultants and potential investors to Malaysia, he added.
Hai-O has a long history of doing business in and with China. Tan is the founding member and past president of the Malaysia-China Chamber of Commerce, which promotes bilateral trade and investment between the two countries.