This article first appeared in The Edge Financial Daily, on April 26, 2016.
KUALA LUMPUR: The Employees Provident Fund (EPF) has offered to acquire an 80% stake in a unit of Malaysian Resources Corp Bhd (MRCB) that will be receiving a piece of land in Bukit Jalil under the National Sports Complex privatisation deal.
The EPF will pay RM421.52 million for the 80% stake in the company that will own the 11.38ha land, with MRCB taking up the remaining 20% interest, MRCB told Bursa Malaysia in a filing yesterday.
The land is part of three land parcels to be transferred by the youth and sports ministry and Syarikat Tanah dan Harta Sdn Bhd (Hartanah) to Rukun Juang Sdn Bhd, which is 85% owned by MRCB Land Sdn Bhd, which in turn is a wholly-owned subsidiary of MRCB.
The three parcels of leasehold “exchange land”, totalling 37.4ha, make up the RM1.632 billion consideration for the privatisation job undertaken by MRCB to refurbish and upgrade facilities at the National Sports Complex.
Rukun Juang was selected to undertake the job on Oct 28 last year in an open tender, and subsequently entered into a privatisation agreement with the federal government and Hartanah.
MRCB said the EPF is proposing to buy the 80% interest in “Exchange Land 1” after it had been delivered pursuant to the terms of the privatisation agreement and transferred to an entity that was directed by Rukun Juang to hold the land.
MRCB, meanwhile, will subscribe for, or purchase, the remaining 20% interest in the entity at a purchase price, and upon the terms and conditions stipulated in the letter of undertaking by the EPF, it said.
MRCB said the EPF would settle the disposal consideration for “Exchange Land 1” in two tranches — the first totalling RM397 million (or alternatively calculated on the basis of RM405 per sq ft) and the second totalling RM24.5 million (or alternatively calculated on the basis of RM25 per sq ft).
“The interest shall be delivered to [the] EPF upon the receipt of the tranche one purchase price in full by Rukun Juang,” MRCB said, adding that the EPF would be appointed its main contractor or project delivery partner for the development of the land.
“[The] EPF undertakes that it shall enter into a joint-venture agreement, a conditional sale and purchase agreement and other related agreements in connection with the sale and purchase of the interest in the entity within 12 months from April 22.
“Prior to the signing of the agreements, MRCB shall provide [the] EPF with a full market study report and a business plan, including a timeline for the development of ‘Exchange Land 1’.
“The agreements shall be subject to [the] EPF being satisfied with the results of their due diligence,” MRCB said, adding that the approved plot ratio for development on “Exchange Land 1” will be no less than 1:6.5.