GEORGE TOWN (Aug 3): EcoFirst Consolidated Bhd's acquisition of a 62-acre (24.8ha) piece of land worth RM145 million in Ulu Klang, Gombak, Selangor has been further delayed due to technical issues on land alignment.
In a statement today, Ecofirst said the group and the landowner, Zurich Insurance Malaysia Bhd have mutually agreed to extend the purchase completion for the piece of land for a further three months to Oct 31, 2015 due to the said reason. The land fronts the Middle Ring Road 2 (MRR2).
In a filing with Bursa Malaysia today, Ecofirst said both parties had via exchange of letters dated July 31 and Aug 3, 2015, agreed in-principle for the extension for the group to pay the balance purchase consideration of RM130.5 million with late payment interest at the rate of 6% per year on or before Oct 31, 2015.
Ecofirst is also required to pay the interest to Zurich Insurance Malaysia for the months of May, June and July on or before Aug 7.
In the filing, Ecofirst said it will provide Zurich Insurance Malaysia monthly updates on the progress of the completion of the sale and purchase agreement (SPA) from itself and the financier.
"For avoidance of doubt, the SPA is only completed when the balance purchase consideration and all late payment interest are paid," it added.
In the statement, EcoFirst chief executive officer Datuk Tiong Kwing Hee said the group is currently awaiting all relevant information pending from authorities in order for it to finalise the full payment of the acquisition.
"EcoFirst has stated that the extension of full payment on balance purchase consideration is due to further clarification and information pending from the relevant authorities pertaining to on land acquisition and alignment arising from the development of Sungai Besi-Ulu Kelang Elevated Expressway connecting to MRR2.
"The planned elevated highway will positively affect certain parts of the land that fronts the Ulu Kelang portion of the MRR2.
"This would in turn affect EcoFirst’s proposed development plans of which the board of directors and the management will take appropriate steps and make necessary changes," Tiong explained.
"Once this land is acquired, it will be the jewel in EcoFirst’s crown, as it is one of the few large parcels left in the Klang Valley,” said Tiong.
“With our plans for this land, our property development division can be expected to contribute positive earnings over the medium- to long-term,” he added.
The conditional SPA was signed on Dec 31, 2013.
The land belonging to Zurich Insurance Malaysia, was inherited by the company after its acquisition of Malaysian Assurance Alliance Bhd.
It was reported that Ecofirst plans to develop a mixed development with commercial components and 42 acres of 100 two- to three-storey bungalows. The remainder of the land will be used for green space and infrastructure. The gross development value was said to be around RM1 billion.
As at 3.08pm, EcoFirst (valuation: 0.5; fundamental: 0.1) shares dropped one sen or 1.69% to trade at 29 sen, with 217,500 shares done. Its market capitalisation stood at RM208.09 million.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)