The government owned Penang Development Corporation (PDC) in Malaysia has sold its stake in an unsuccessful aquaculture firm in its effort to do away with non-core businesses.
The company sold its 60% stake in PDC Aquaculture (PDCA) to joint-venture partner GST Seafood Suppliers (GST) for $414.000, making $84,400 in profit.
In contrast, its initial investment in PDCA was MYR 1.035 million ($329,600).
As well as deciding to sell its equity, the PDC
board has moved to lease its aquaculture location in Batu Kawan to GST for 15 years in a deal worth $987,195, reports The Malaysian Insider.
This is all part of state development agency PDC’s new strategy of Competency, Accountability and Transparency management to maximise its use of assets, explained Penang Chief Minister Lim Guan Eng.
“With the sale of PDCA, PDC has completely divested from the aquaculture business and is currently acting only as a landlord through the rental of the land to GST,” he said.
“Clearly, this restructuring exercise has topped the previous government’s practice of venturing into activities that was not its core business.”
Established in October 2005 with a paid-up capital of $549,326, PDCA launched its aquaculture operations in February 2006 on a 69-acre site in Batu Kawan owned by PDC.
The land was rented to PDCA monthly for $1,053 for a period of three years starting on 1 January 2007.
Since its incorporation, PDCA has been incurring losses. Based on its audited accounts for the year ended 31 December 2008, accumulated losses reached $242,447.
PDC thus decided at a board meeting last February to sell its full stake in PDCA.
GST, now whole owner of PDCA, has changed the company’s name to GST Aquaculture (Batu Kawan).