KUALA LUMPUR (March 1): Protasco Bhd announced today it is undertaking a joint mixed residential development project in Tampin, Negeri Sembilan, which has an estimated gross development value of RM371.59 million, with Penmaland Sdn Bhd.

The collaboration is considered a related party transaction as Penmaland’s major shareholder is Datuk Seri Chong Ket Pen, the single largest shareholder in Protasco, with control of a 29.53% stake. Chong is the executive vice chairman-cum-managing director of Protasco.

In an exchange filing today, Protasco said the conditional joint development agreement was signed between its wholly-owned unit De Centrum Retail Sdn Bhd and Penmaland, which is the registered owner of the land measuring some 55.48 ha.

Penmaland had in August 2018, procured the existing planning approval from Majlis Daerah Tampin.

The land is approved to be developed as a mixed residential development known as “Denai Hills”, comprising 703 units of terraced houses, 32 units of semi-detached houses, 71 units of bungalows, three homestay units and a commercial lot.

“Subject to property market conditions, the development period is expected to be approximately seven years.

“As at the latest practicable date, the development has yet to commence and the construction works for the development is expected to commence in the third quarter of 2019 provided that the agreement has become unconditional,” read the filing.

Pursuant to the agreement, Penmaland will grant De Centrum full and unfettered rights to carry out the development on the land, in exchange for a cash consideration of RM48.6 million.

The group intends to fund the development through a combination of internal funds (including cash flows generated from the project) and bank borrowings, the quantum of which cannot be determined at this juncture.

Under the agreement, De Centrum is entitled to receive approximately 87% of the estimated aggregate GDV of the project, or some RM323.28 million based on its current estimation.

Shares in Protasco closed two sen or 6.52% higher today at 25 sen, for a market capitalisation of RM120.35 million. The stock has lost about 69% of its value over the past year.