KUALA LUMPUR (Apr 29): UEM Sunrise Bhd said today that the joint venture agreement (JVA) it entered into with Medini Security Services Sdn Bhd (MSSSB) and Nusajaya Five O sdn Bhd (NFO) to form a security service company to provide enhanced security for Nusajaya, has been rescinded.

The deal collapsed because NFO was not able to secure the approval from the Ministry of Home Affairs for NFO “to be granted a waiver of the primary condition to obtain the security license”, it said in its filing to Bursa Malaysia.

The primary condition is that 30% of the equity in NFO has to be held by an individual shareholder or a group of shareholders who is either a former senior police officer with the rank of at least senior assistant commissioner II (SAC II), a former senior army officer with the minimal rank of a colonel, or a former civil servant with a job grade of at least 52 – with five years’ experience in the security sector.

“Pursuant to the rescission and in accordance with the terms of the JVA, the company (UEM Sunrise) has on April 29, 2015, acquired MSSSB’s 20% equity interest in NFO represented by 60,000 ordinary shares of RM1 each in NFO, for a cash consideration of RM60,000 only, equivalent to the subscription price paid by MSSSB for the shares, resulting in NFO becoming a wholly-owned subsidiary of the company,” the filing read.

The rescission of the JVA notwithstanding, UEM Sunrise said it intends for NFO to continue providing the services of auxiliary policemen for its projects in Nusajaya.

The acquisition is not expected to have an effect on the earnings or net assets of UEM Sunrise group for the financial year ending Dec 31, 2015, nor its share capital and substantial shareholders’ stakes.

Khazanah Nasional Bhd is a major shareholder of UEM Sunrise though UEM Group Berhad, which is UEM Sunrise’s immediate holding company.

Khazanah is also the major shareholder of Iskandar Investment Berhad, which in turn owns 100% of MSSSB.  

To recap, in 2012, UEM Land Holdings Bhd, a wholly-owned subsidiary of UEM Sunrise, had announced that together with MSSSB, it plans to form a full-fledged security service company to provide enhanced security for Nusajaya — one of the five nodes of Iskandar Malaysia.

UEM Sunrise shares closed 2 sen or 1.5% lower at RM1.31 today, with a market capitalisation of RM6.035 billion.