KUALA LUMPUR (Sept 27): Tropicana Corp Bhd is going to jointly develop two plots of land it owns in Selangor into a residential development, with two other parties.

Its wholly-owned unit Tropicana Harapan Sdn Bhd (THSB), which holds the title to the plots, together with THSB's unit Vivascape Sdn Bhd, inked a joint venture (JV) agreement with Matrimont Development Sdn Bhd for the partnership.

Vivascape, which is wholly owned by THSB and an indirect Tropicana unit, will serve as the JV company for the development. Following the agreement, Matrimont will take up a 49% stake in Vivascape and THSB will hold the remainder 51%, following a share issuance at the aggregate share subscription price of RM249,999, according to Tropicana's stock exchange filing today.

Matrimont is an associate company of Temokin Holdings Sdn Bhd, a construction company whose portfolio ranges from the building of houses to the design and construction of the new Istana Negara and the turnkey project of Seremban middle ring road.

The plots the partners plan to develop are located on Lot 1 and Lot 4 in Seksyen 1, Pekan Sungai Penchala, Selangor.

Tropicana said the proposed JV is in line with its objective to expand and strengthen its existing business for the development of residential properties, and represents an opportunity for the group to unlock the land value with a lower cost of equity.

Furthermore, with collaboration by way of the proposed JV, Tropicana said the parties will leverage on each other's expertise to reduce operating development cost and enhance operating cash flow.

With the proposed JV, Tropicana said it is able to enjoy the future upside and prospects from the participation of the development of the project.

Tropicana shares closed unchanged at 91 sen today, and for a market capitalisation of RM1.3 billion.