KUALA LUMPUR (Nov 3): Country Heights Holdings Bhd's joint venture (JV) with the Sarawak Land Custody and Development Authority (LCDA) has been terminated over claims that the property developer had failed to address contract breaches.

In a bourse filing, Country Heights said that its 70:30 JV company Borneo Heights Sdn Bhd to jointly develop, manage and promote a hill resort in the state was terminated via a letter of termination yesterday.

The JV, which had been in place since Sept 20, 1994, was terminated on a unilateral basis by the LCDA, according to Country Heights, over allegations that the latter had failed, neglected or refused to remedy alleged breaches of the agreement stipulated in a notice dated Sept 17.

Country Heights said that it immediately refuted the allegation by the LCDA on Sept 17.

Consequently, it plans to challenge the termination which it contends was not done in accordance with the JV agreement signed 26 years ago.

The developer said it has sought a legal opinion regarding the termination, and believes that it has a good case for recovering losses and/or damages from the LCDA.

"[Country Heights] wishes to state that [it] has been funding the project since the inception of the joint venture without issuing a cash call to LCDA while maintaining the assets free of encumbrance for the benefit of the joint venture since 1998. Further, the allegation made by the LCDA does not warrant any termination," it said.

According to the developer, it reserves the right to claim its 70% share of the land value based on RM50 per sq ft measuring 2,125.67ha of land involved in the JV.

A back-of-an-envelope calculation reveals that the total land value, based on Country Heights' figures, is a whopping RM11.44 billion, which means that the 70% share is worth RM8.01 billion.

Country Heights is launching arbitration proceedings, as per the agreement.

"The termination, if successful, is expected to have a material effect on the net asset of [Country Heights] and the group for the financial year ending Dec 31, 2020," it said.

Shares in Country Heights, which were not traded today, last closed at RM1.25 per share, valuing it at RM344.63 million.