Investors sought for The Rice Miller project in Penang

This article first appeared in The Edge Malaysia Weekly, on February 19, 2018 - February 25, 2018.
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THE receivers and managers of Asian Global Business Sdn Bhd — which was undertaking the ambitious The Rice Miller Hotel and Residences project in Penang — are looking for interested parties to revive and complete the RM250 million development.

The project, which commenced in 2010, is understood to have been abandoned a year ago. Located within the George Town Unesco World Heritage Site, the project includes The Rice Miller City Residences, retail lots, commercial blocks, The Rice Miller Hotel and the godowns.

Malaysia Building Society Bhd (MBSB) has appointed Yeoh Siew Ming and Lim Keng Peo as receivers and managers of the residential and commercial portion of the project while Bank Pembangunan Malaysia Bhd has appointed Lim San Peen as the receiver and manager of the hotel and godowns portion. The appointments by MBSB and Bank Pembangunan were made last August and November respectively.

The project sits on four plots of land that add up to three acres, with the residential and commercial portion occupying three plots measuring 82,764 sq ft or 1.9 acres, while the hotel and godowns sit on a single plot measuring 43,443 sq ft or an acre. The assets face Pengkalan Weld and Gat Lebuh Gereja.

Late last month, Deloitte Corporate Solutions Sdn Bhd, acting on behalf of the receivers and managers, invited expressions of interest (EOI) for the abandoned residential and commercial portion, which comprises 99 units of serviced residence suites, 23 retail lots and two commercial blocks. It is learnt that the buildings also come with 60 parking bays. The EOI closes on March 30, 2018.

Acting on behalf of San Peen, PricewaterhouseCoopers Advisory Services Sdn Bhd in early January invited prospective investors to submit their offers for the hotel and godowns portion. The submissions closed on Jan 29, 2018. It is worth noting that receivers and managers act in their personal capacities.

The portion being handled by San Peen includes a five-storey neoclassical hotel with 46 luxury suites, a two-storey pre-war building under conservation that is called Kate at 9, a pre-war single-storey godown that has been extended to four storeys and two double-storey pre-war godowns. The plan is for the three godowns to house hotel facilities such as a swimming pool, fitness centre, kitchen and meeting rooms. These components are believed to be 80% to 90% completed.

A search with the Companies Commission of Malaysia (CCM) shows that the shareholders of Asian Global Business are Kate Lim Beow Leng (43.96%), Dr Noraini AR Abdullah (33.65%), Lim Lay Beng (21.21%) and Datuk Seri Mohammed Azman Md Yusoff (1.18%).

Based on the financial data available from CCM, in the financial year ended Dec 31, 2015, Asian Global Business had accumulated losses of RM11.66 million. Its total liabilities stood at RM143.63 million, of which RM59.97 million was current.

Some hotel industry players tell The Edge that in the past one year, Dr Noraini had approached several hotel owners to buy the hotel portion but had been unsuccessful. In an interview last March, Dr Noraini was quoted as saying that the entire project would be completed in the first quarter of 2018.

Meanwhile, the information pack purchased by The Edge from Deloitte Consulting shows that Asian Global Business owes MBSB RM24.63 million in principal and interest under two bridging loans. To recover the sum owed, the receivers and managers are proposing two options. One is for an entity to acquire the charged assets on an “as is where is” basis and take over the project. Also, the receivers and managers are open to any other proposals. 

According to the information pack, there are two residential phases that sit atop the retail lots. The first phase is 91% completed. Eighty-two of the 85 residential units have been sold while 19 of the 21 retail lots have been purchased. Only 20% of the second phase have been completed. Five of the 14 residential units have been sold while neither of the two retail lots have been purchased.

As for the two commercial blocks, one has been sold but it is only 25% completed while only 2% of the work has been carried out on the second block.

“Vacant possession was due to be delivered to most purchasers between 2013 and 2017 but the same has not been resolved up until today,” the information pack says. “As at Dec 31, 2017, liquidated and ascertained damages incurred for the project had accumulated to RM21.48 million.”

The information pack does not reveal the sum owed to Bank Pembangunan but it says the receivers and managers were appointed under the powers contained in a debenture dated Aug 19, 2011. However, if the charges identified in the SSM search are anything to go by, Asian Global Business owes Bank Pembangunan as much as RM59 million.

In 2011, City & Country reported that Asian Global Business chairman Kate is the great-granddaughter of Lim Choo Guan (1884-1901), the first rice miller in Penang. She told City & Country that most of the three-acre parcel had belonged to the Lim family — one of the island’s five “old families” — for more than 100 years. She had reportedly acquired the rest of the land for RM45 million in 2005.


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