PETALING JAYA: The prime movers of the development of Bandar Malaysia, the consortium called ICSB comprising Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC), have found themselves out of the deal to develop the choicest piece of land in the city.
According to a statement by TRX City Sdn Bhd, an entity under the Ministry of Finance Inc (MoF), the share sale agreement (SSA) governing the development of the 486 acres of land in Sungai Besi has lapsed because ICSB failed to meet the payment obligations despite being granted repeated extensions.
This latest development comes as Prime Minister Datuk Seri Najib Tun Razak cancelled a scheduled visit at the last minute to the Bandar Malaysia development yesterday evening, catching officials off-guard.
Following the termination of the agreement, MoF through TRX City, owns 100% of Bandar Malaysia, the statement stated.
“Despite repeated extensions being granted, ICSB failed to meet the payment obligations outlined in the conditions precedent under the SSA. As a result, the SSA between the parties stands null and void with immediate effect.
“Looking ahead, given a significant appreciation in the value of the Bandar Malaysia land, TRX City’s sole shareholder, the MoF, will now be retaining 100% ownership of the site to ensure that the Malaysian people benefit from its development in its entirety,” it said. Following this, TRX City said it would immediately invite expressions of interest for the role of master developer of Bandar Malaysia to ensure that the Malaysian people benefit from its development in its entirety.
In an immediate response, ICSB said that it was concerned with the termination notice and subsequent press release issued by TRX City, and that it was reviewing the matter with its advisers and legal counsel.
“ICSB is concerned with the content of the termination notice and the subsequent press release issued by TRX City, which, given the factual matrix, does not fully and accurately reflect the circumstances and conduct of the parties in this matter.
“ICSB takes this matter very seriously and is at present reviewing the content of the termination notice and press release with its advisers and legal counsel. A further announcement on this matter will be made in due course.” On Dec 31, 2015, ICSB and TRX City entered into an agreement to jointly develop the Bandar Malaysia land. ICSB is 60% owned by IWH and 40% by CREC.
Under the agreement, the ICSB consortium would hold 60% in Bandar Malaysia, while TRX City would hold the remaining 40%.
It was reported that ICSB had paid a deposit of RM150mil when it was selected as the chosen bidder to partner TRX City as the master developer of Bandar Malaysia.
ICSB had valued the entire 486 acres at RM12.35bil and its 60% portion was valued at RM7.41bil.
According to a statement by 1Malaysia Development Bhd (1MDB) (which used to own TRX City) on Jan 5, 2016, the ICSB consortium was to pay a 10% deposit, amounting to RM741mil, upon the execution of the SSA. It is not known if the entire amount of 10% has been paid or any other payment obligations have not been met, which has caused TRX City to call off the agreement on the grounds that it has lapsed.
On the selection process for the master developer of Bandar Malaysia, TRX City said that it would involve a strict criteria, including track record, speed of delivery and financial capability for such a large-scale development.
“This is to enhance all aspects of Bandar Malaysia, including its role as a business, transport, residential and tourism hub,” the statement said.
“The steps taken today will ensure that there is no detrimental impact on the long-term development of Bandar Malaysia, and that, upon its completion, the site will serve the national interest to an even greater extent than before,” it added.
Bandar Malaysia is Malaysia’s largest property project and an integral part of shaping the city. It will be Malaysia’s transport nucleus, connecting the Kuala Lumpur-Singapore high-speed rail, MRT lines, KTM Komuter, Express Rail Link and 12 highways.
The development of the land was initially given to 1MDB, which selected ICSB after a competitive process.
However, as part of restructuring the finances of 1MDB, the land was returned to the MoF.