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This article first appeared in The Edge Malaysia Weekly on October 8, 2018 - October 14, 2018

PURCHASERS of Mammoth Empire Holding Sdn Bhd’s (MEH) Empire Remix development in USJ 1, Subang Jaya, can heave a sigh of relief as the project — which has seen construction delays — is expected to be taken over by a new investor, or a group of new investors.

The new investors will have to fork out over RM350 million to complete the project, according to valuers.

At least two parties that are already associated with the project — Dergahayu Sdn Bhd, which owns the 14-acre Empire Remix site, and listed entity HCK Capital Group Bhd — may join forces to take over the project, which was launched in 2012.

According to a source, the new investors are likely to assume all liabilities of the project, especially the rights of the end purchasers and the banks that have an interest in the development. There are about 2,400 purchasers.

HCK Capital, which is controlled by businessman Tan Sri Clement Hii, acquired en bloc two office blocks — The Duo and The Cubiz — in the Empire Remix development from MEH in 2012.

When contacted, a senior executive of HCK Capital tells The Edge that an appropriate announcement will be made when and if the matter is finalised. He did not deny the takeover plan.

Empire Remix and Empire Remix 2 are integrated commercial developments with a combined gross development value of RM1 billion.

Details on the joint venture remain sketchy as the negotiations are still ongoing.

Sources say Dergahayu and HCK Capital are in talks to assume the equity interest in True Renaissance Development Sdn Bhd, a company under the MEH group in which Datuk Sean Ng Yee Teck holds an 80% stake while Datuk Danny Cheah Joi Yong has 20%. A deal may be finalised as early as this week.

The exit of Ng and Cheah follows a termination letter served by Dergahayu to True Renaissance in January. Although True Renaissance managed to obtain an interim injunction to continue with works, it has now decided not to proceed with the development.

Meanwhile, it is no secret that MEH has been facing financial difficulties. The group sold its crown jewel, Empire Shopping Gallery in Subang Jaya, last year and plans to sell a 64-acre tract that had been earmarked for the Empire City Damansara 2 development.

According to a purchaser who acquired a unit in Empire Remix, Cheah held a meeting with several purchasers on Sept 29. He announced that neither he nor Ng will be shareholders of True Renaissance after they hand over the project — expected to be in two weeks’ time.

Cheah told the purchasers that the identity of the new shareholder — described as a reputable public listed company based in Petaling Jaya, Selangor, with good financial capabilities — will only be disclosed after the handover.

When contacted by The Edge, Cheah confirmed that he had met the purchasers and that a new investor is coming on board. However, he declined to reveal further details.

According to one source, landowner Dergahayu is keen to work with HCK Capital to complete the project. The shareholders of Dergahayu, which is also a property developer, are Lim Chooi (22.22%), Ng Kim Joo (22.22%), Ng Seow Ying (13.89%), Ng Seng Hoe (13.89%), Ng Seng Kee (13.89%) and Ng Seng Cheong (13.89%).

HCK Capital had already stated in its annual report for the financial year ended Dec 31, 2017, that it has been in talks with relevant parties and has proposed to participate in the long-delayed project.

“At present, there is a delay in The Duo and The Cubiz projects due to challenges faced by the developer.

“The group is currently negotiating with the developer and other relevant parties on a plan to complete the projects. We have also proposed to be involved in the projects, and are awaiting feedback from all parties,” the report says.

MEH is no stranger to HCK Capital. The former is building a 38-storey office block for HCK Group’s headquarters at Empire City Damansara in Petaling Jaya. The Edge understands that the building will be completed in September next year.

The RM350 million required to complete the Empire Remix project excludes potential obligations under liquidated and ascertained damages (LAD). Between 30% and 70% of the works have been completed, depending on the block.

During the meeting, Cheah also informed purchasers that the terms and conditions will remain the same as those stipulated in the sales and purchase agreement, including the LAD. The new shareholder will also continue with the Developer Interest Bearing Scheme. MEH is scheduled to settle all outstanding DIBS this month before the handover.

 

 

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