KUALA LUMPUR (May 31): Property development and construction firm Malaysian Resources Corp Bhd (MRCB) is partnering the Employees Provident Fund (EPF) to jointly develop three parcels of leasehold land in Bukit Jalil here, which have a potential gross development value (GDV) of RM21 billion over a 20-year horizon.
In a filing with Bursa Malaysia today, MRCB said its 85%-owned subsidiary Rukun Juang Sdn Bhd has signed a subscription and shareholders agreement (SSA) with EPF's wholly-owned unit Tanjung Wibawa Sdn Bhd to form a joint venture (JV) company called Bukit Jalil Sentral Property Sdn Bhd to jointly undertake the development on the land measuring a combined 76.14 acres. The remaining 15% stake in Rukun Juang is owned by Rasma Contractors Sdn Bhd, a private vehicle controlled by former minister of federal territories Datuk Seri Raja Nong Chik Raja Zainal Abidin.
Under the SSA, Rukun Juang will sell the land to Bukit Jalil Sentral Property for up to RM1.43 billion or RM405 per sq ft.
The proposed subscription entails the investment by Rukun Juang and Tanjung Wibawa in the JV company via the subscription of new shares and new redeemable preference shares — class A (RPS-A) at an issue price of RM1 each.
To subscribe for the shares in Bukit Jalil Sentral Property, both Rukun Juang and Tanjung Wibawa will make payments in two tranches subject to achieving certain milestones.
MRCB said in the first tranche, Rukun Juang will pay RM268.65 million for two million shares and 266.65 million of preference shares in Bukit Jalil Sentral Property, while Tanjung Wibawa will fork out RM1.07 billion for eight million shares and 1.07 billion preference shares.
The second tranche payment will only be made once the land has secured a development order, after which MRCB said Rukun Juang will pay up to RM16.58 million for up to 16.58 million preference shares, while Tanjung Wibawa will be paying up to RM66.33 million for up to 66.33 preference shares.
Once completed, Rukun Juang will hold a 20% stake in the JV company, while Tanjung Wibawa will own the remaining 80% shares.
MRCB said it intends to develop the land into an integrated project comprising commercial and residential properties such as serviced apartments, shop offices, small office-home office, office towers, apartments, retail malls and a hotel.
“The development is proposed to be launched in three phases with a project horizon of 14 years. The proposed development has the potential to position itself against mixed development projects such as Empire City, Pantai Sentral Park and Bangsar South,” it added.
“As the property development project is a large-scale project that is expected to span across 20 years, the shareholders have agreed to include the call and put options in the share subscription agreement to accord them with the flexibility to regulate their shareholdings in Bukit Jalil Sentral, if necessary, during the early to middle stages of the proposed JV,” said MRCB.
The three parcels of land is part of a privatisation agreement MRCB had entered into with the government in October 2015 in relation to the proposed refurbishment and upgrading of facilities at the National Sports Complex in Bukit Jalil for a contract sum of RM1.34 billion.
“As the proposed JV is expected to be implemented in the fourth quarter of this year, it is not expected to have any material effect on the group's earnings and earnings per share for the financial year ending Dec 31, 2017 (FY17),” MRCB said.
“Nevertheless, the future development of the land as well as the contributions from the management contractor are expected to contribute positively to the future earnings of MRCB Group for FY18 and up to the completion of the development of the lands,” it added.
MRCB shares dropped four sen or 2.86% to close at RM1.36 today, with 22.71 million shares done, giving it a market capitalisation of RM2.97 billion.