KUALA LUMPUR: Sunsuria Bhd has proposed to buy the half it does not own in joint-venture (JV) firm Sime Darby Sunsuria Development Sdn Bhd (SDSD) for RM173.4 million in cash.

SDSD was incorporated as a 50:50 JV company between Sime Darby Property (Sungai Kapar) Sdn Bhd and Sunsuria’s unit Sunsuria Gateway Sdn Bhd (Sunsuria Gateway) to undertake a proposed property development project known as Suria Serenia on a 331.27-acre (134.1ha) plot of freehold land in Putrajaya.

In a press statement, Sunsuria (fundamental: 2.5; valuation: 0.8) said it entered into a conditional share purchase agreement with Sime Darby Property Bhd for the proposed acquisition yesterday, and that the deal is expected to be completed by the second quarter of this year.

The property developer had earlier executed a subscription agreement in Sunsuria Gateway for the subscription of RM1 million ordinary shares and RM237 million redeemable preference shares-B in Sunsuria Gateway for the entire equity stake — which resulted in Sunsuria effectively owning the other 50% interest in SDSD. Following the completion of the conditional share purchase agreement with Sime Darby Property, Sunsuria will assume full control of SDSD, it said.

“This represents a significant milestone for Sunsuria to optimise the value and effective implementation of the development being a smart liveable and sustainable city,” said Sunsuria.

Sunsuria said from the proposed subscription of RM238 million in Sunsuria Gateway, RM168.39 million will be utilised to repay all its existing redeemable preference shares-A.

Of the RM168.39 million settlement, RM100 million is in the form of new shares to be issued by Sunsuria at an issue price of 98 sen per share.

It added that RM69.61 million will be retained by Sunsuria Gateway to be utilised for, inter alia working capital purposes including payment of the remaining unpaid land purchase consideration by SDSD.

Suria Serenia is an integrated development surrounding the upcoming Xiamen University Malaysia Campus and is strategically connected to the Express Rail Link and highways. Sunsuria closed six sen or 3.8% higher at RM1.65 yesterday, giving it a market capitalisation of RM261.3 million.

This article first appeared in The Edge Financial Daily, on April 21, 2015.