Yap doesn’t discount further asset disposals. Photo by Haris Hassan/The Edge
An artist’s impression of part of Malaysian Tourism City
MERIDIAN Bhd, formerly known as Meda Inc Bhd, has put several of its assets — including a mall and an office building in Seberang Perai, Penang, and land parcels in Cyberjaya, Selangor — up for sale. The money raised from the disposals will be used to develop the 622-acre Malaysia Tourism City (MTC) in Kota Linggi, Melaka.
The decision to divest the long-held assets follows the emergence last June of a new substantial shareholder, Datuk Seth Yap Ting Hau. Yap, who now controls a 30.42% stake in Meridian directly and via M101 Ventures Sdn Bhd, has set a new direction for the company.
Yap is the founder and CEO of M101 Group of Companies, which promotes property tourism as a business strategy. The group is best known for its M101 Skywheel project in Kuala Lumpur, which will feature a 220m-tall Ferris wheel that will be positioned on the 52nd level of a 78-storey building. M101 will also open the world’s first Monopoly-themed hotel.
“The strategy (for Meridian) is to unlock the value of these assets. Meda has suffered many years of losses. We have set a new direction for the company, which is to focus 100% on the development of MTC,” says Yap, who is also the CEO of Meridian. Meda has been in the red since its financial year ended Dec 31, 2014. It posted a net loss of RM23.09 million in FY2018.
The Seberang Perai asset put for sale is The Summit in Bukit Mertajam, comprising a five-storey freehold shopping mall with 314,979 sq ft of space, a seven-storey office tower with 59,998 sq ft of space and 662 parking bays.
“Mall management is not our core business,” Yap says in explaining why Meridian decided to sell the 17-year-old The Summit, adding that its focus is more in the central and southern region of the peninsula. Meridian owns 60% of the stratified property, which has an estimated value of RM50 million.
The three land parcels with commercial titles in Cyberjaya collectively measure 6.12 acres and are estimated to be worth RM20 million in total.
Apart from raising cash from the sale, Meridian is planning a private placement of up to 10% of its total shares issued and proposing a share issuance of a similar quantum, involving up to 49.26 million shares. This will raise RM36.71 million, of which RM30.13 million will be allocated for property development activities in Kota Linggi. The company will also raise money via bank borrowings.
In total, Meridien has land worth RM150 million, including the 622 acres in Kota Linggi, Melaka; 112.8 acres in Sungai Siput, Perak; 6.12 acres in Cyberjaya; and 9.73 acres in Tanjong Kling, Melaka. Yap does not discount the possibility of selling the smaller parcels of land.
Meanwhile, Phase 1 of the MTC development will include a weekend market, an adventure park, a water theme park and bungalows.
Meridian expects to invest RM20 million in the weekend market, which will operate on Fridays, Saturdays and Sundays. Yap says 500 of the 3,500 booths available for lease have already been taken up. The market is expected to open in mid-2020.
The adventure park, meanwhile, is scheduled to open its doors by the end of the year. The site was previously used as an obstacle course for team building. Yap says Meridian will have to pump in RM5 million to refurbish the 50-acre site.
The water theme park, meanwhile, will span 15 acres and is expected to be ready in three years. Yap estimates that the park will cost about RM80 million.
MTC will also be launching 480 bungalows and has received an encouraging show of interest . “Each plot measures about 9,000 sq ft. The units will have a built-up of 2,000 sq ft and sell for RM700,000 to RM800,000.
Phases 2 and 3 will have a designer moto-tourism park, a shopping mall and entertainment centre, a convention centre, a medical centre and even contract farming of organic food.
On when Meridian will turn profitable, Yap says it could be as early as FY2019 if it is able to take bookings for the bungalows as well as book gains from the disposal of its assets.
Asked if he plans to inject assets owned by M101 into the listed entity, he replies, “Not at this point. We want to develop the land (in Melaka) first and increase the value of the land.”
Meridian is involved in property development, oil palm cultivation, which Yap plans to continue for now, and project management services.
The Summit in USJ Subang Jaya, comprising a hotel and mall, as well as The Summit in Bukit Mertajam were developed by the company when it was known as Meda.
The group also built Scott Garden townhouses and Scott Towers condominium in Johor Baru as well as the Westlake View township in Sungai Siput.
Meda was formerly controlled by Datuk Tiong Kwing Hee and the Teoh brothers — Datuk Patrick Teoh Seng Foo, Datuk Kenneth Teoh Seng Kian and Teoh Seng Aun. With the exception of Seng Foo, Tiong, Seng Kian and Seng Aun are still substantial shareholders of Meridian.
The four are also involved in property developer EcoFirst Consolidated Bhd, formerly known as Kumpulan Emas Bhd.
Meridian closed at 29.5 sen last Thursday, giving it a market capitalisation of RM142.5 million.