Thursday 28 Mar 2024
By
main news image

KUALA LUMPUR CITY HALL (DBKL) has confirmed that it will pay RM145 million to a consortium of lender banks to settle a loan taken by troubled Plaza Rakyat Sdn Bhd (PRSB), the developer of Plaza Rakyat. DBKL has since secured the Plaza Rakyat site in Jalan Pudu for redevelopment.

Mayor Datuk Ahmad Phesal Talib told The Edge last week that DBKL agreed to pay the sum after the matter was settled by arbitration on July 4.

“[The payment] will be rationalised as a part of the new considerations, [of any] new proposal to salvage the project,” he said.

The arbitration process between DBKL and PRSB was to resolve the dispute between the parties over the rights to the abandoned Plaza Rakyat site.

DBKL, the original owner of the 15.3-acre parcel, has long sought to repossess the site and salvage the Plaza Rakyat project, which has been stalled since the 1997/98 Asian financial crisis. A dispute arose between DBKL and PRSB because the latter had claimed that it had delivered on certain commitments to the project and demanded compensation from City Hall for repossessing the land.

The RM145 million that DBKL has agreed to pay PRSB constitutes a substantial haircut for the company’s lenders, led by RHB Bank Bhd. According to sources, and legal documents seen by The Edge, the total amount claimed by the lenders was

RM220 million, including interest. The original amount drawn by PRSB in the 1990s was RM58 million.

RHB Bank had not responded to questions from The Edge at press time. (Banks do not usually comment on specific loans because this would contravene the Financial Services Act 2013.)

According to sources, Profit Consortium Sdn Bhd, a company linked to Tadmax Resources Bhd’s largest shareholder Major (R) Anuar Adam, began its evaluation of the site last Wednesday before sending DBKL a proposal.

“We are waiting for the business proposal from Profit Consortium. We will then consider and evaluate its proposal before concluding any joint venture with the company,” said Ahmad Phesal.

He added that DBKL has yet to decide on a new developer for the project and that a decision will be made based on the maximum value that can be derived from the project.

An open tender to revive the project was conducted by AdamPrimus Chartered Accountants, the receiver and manager of PRSB, in May last year.

AdamPrimus, which was appointed by the consortium of lenders after PRSB was declared bankrupt, had chosen Ivory Properties Group Bhd to revive the project. However, DBKL did not recognise AdamPrimus’ authority to appoint a new developer, claiming it had terminated the joint venture and lease agreement with PRSB in 2010, three years before AdamPrimus was appointed by the lenders.

Penang-based property developer Ivory Properties had proposed to acquire the lease and development rights to the Plaza Rakyat project for RM400 million from PRSB and pay DBKL 7% of the gross development value, or a maximum of RM560 million, for the lease.

It also proposed to pay RM40 million to persons who had acquired a portion of the 15.3-acre parcel from PRSB, RM38 million in outstanding quit rent and other assessments, and RM22 million in consultancy fees.

However, due to the long-standing issues between DBKL and PRSB, Ivory Properties chose not to pursue its interest in the project. Then came Profit Consortium.

A check with the Companies Commission of Malaysia (SSM) shows that Profit Consortium is wholly owned by Gabungan Tiasa Sdn Bhd, whose shareholders are Maxcorp Development Sdn Bhd with a 42.9% stake, SW Land Sdn Bhd (42.9%) and Tan Sri Abdul Samad Alias (14%).

Maxcorp Development is owned by Anuar of Tadmax Resources and his sons Aldillan Anuar and Almiran Anuar.

Anuar held a direct 29.93% stake in Tadmax as at Aug 28. Aldillan is an executive director of the company while Almiran is its legal head. Abdul Samad was redesignated its chairman on June 19.

In the financial year ended June 30, 2013 (FY2013), Maxcorp Development posted an after-tax loss of RM1.91 million. Its current assets stood at RM20.45 million and its current liabilities at RM10.81 million, according to filings with SSM.

Profit Consortium is also indirectly owned by Abdul Jaliluddin Jamaluddin, who owns 69.31% of Sungei Wang Group Sdn Bhd, which in turn has a 96% stake in SW Land.

Jaliluddin was a non-independent, non-executive director of the politically connected Putera Capital Bhd, which is now a private company. He made a return of more than 100% from the sale of his 62% equity interest in Sungei Wang Plaza to CapitaLand Ltd for RM595 million in 2008.

Sungei Wang Group, formerly known as Kencana Property Management Sdn Bhd, bought Sungei Wang Plaza from Landmarks Bhd for RM284.8 million cash in 2007.

The chequered Plaza Rakyat project

The history of the Plaza Rakyat project goes back to 1992, when PRSB was formed to undertake the construction of what would have been the first integrated development in Kuala Lumpur that was connected to a mass public transport network.

In late 1992, PRSB was bought by Wembley Industries Holdings Bhd, a company owned by Sarawak tycoon Tan Sri Ting Pek Khiing. When the Asian financial crisis struck in 1997, Wembley struggled to finance the project.

Several attempts were made by PRSB to revive the project between 2005 and 2009, including proposing to change the build-lease-transfer concept to an outright sale, and revising the joint-venture agreement to appoint Global Upline Sdn Bhd as the main contractor.

After little progress for more than a decade, DBKL unilaterally terminated the lease agreement signed with PRSB in February 2010. PRSB then sought arbitration, which ended in favour of DBKL in July this year.

This article first appeared in The Edge Malaysia Weekly, on December 8 - 14, 2014.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.

      Print
      Text Size
      Share