A subsidiary of mainboard-listed Fu Yu Corporation has agreed to sell land-use rights and buildings in Shanghai’s Free Trade Zone.
The land-use rights comprise a 33,280-sq-m area, which run from 1 March 1996 to 28 February 2046. The deal also includes a three-storey production-cum-warehouse with 8,031-sq-m ancillary office space.
The total sale consideration for the deal was 45 million yuan (S$9.2 million).
The buyer has agreed to rent the properties to Fu Yu Moulding & Tooling Shanghai for four years, and the first two years will be rent free. The rental for the last two years will yield 2.8 million yuan a year.
Fu Yu believes that the sale will improve the company’s cash flow position and reduce its reliance on bank borrowings. It added that S$6.16 million of the total net proceeds will be allocated to bank borrowings by its China subsidiaries, while S$1.95 million will be reserved as working capital.