KUALA LUMPUR (July 18): Spring Gallery Bhd has ended a joint venture (JV) with Hasil Senudong Sdn Bhd (HSSB) to undertake a residential development with a gross development value of RM161.2 million in Perak after both parties failed to strike an agreement before the deadline expired.

On Jan 18, Million Rich Development Sdn Bhd (MRDSB), a wholly-owned subsidiary of Spring Gallery, had entered into a 60-40 JV agreement with HSSB for the proposed project.

Under the deal, HSSB was to contribute the 3.3ha land while MRDSB was to contribute and bear the entire cost and expense of developing the land.

HSSB was also expected to apply for and obtain the relevant conversion of the category of usage of the land within six months from the date of the JV agreement from recreational land to residential.

In a filing with Bursa Malaysia today, Spring Gallery said as at today, HSSB had failed to obtain the relevant approval for the conversion.

The group noted that it does not intend to grant an extension of time to HSSB as it foresees that there will be a further delay by HSSB to obtain the said approval and the project may not be able to commence based on the initial planned timeframe.

"The board is of the view that a termination will minimise the business and financial risk of the group," it added.

HSSB has within 14 days to refund the RM2.05 million MRDSB had paid as performance bond, which Spring Gallery said it could be re-allocated to the group’s on-going and future construction and property development projects.

The project, which was supposed to start in January 2018 and be completed within two years, would have provided another stream of revenue to complement the group's existing construction business.

Spring Gallery shares closed down half sen or 0.76% at 65 sen today for a market capitalisation of RM111.19 million.