SHAH ALAM: The state assembly has approved a RM413mil loan to its investment arm Kumpulan Darul Ehsan Bhd (KDEB) to enable it to buy a 100% stake in developer Kumpulan Hartanah Selangor Bhd (KHSB).
Mentri Besar Tan Sri Khalid Ibrahim said the mortgage-free loan, with an interest of 4%, would have to be repaid to the state government within a year.
Following the takeover, KDEB would issue bonds through commercial banks to repay the loan, said Khalid.
KDEB's subsidiary Kumpulan Perangsang Selangor Bhd (KPSB) holds 56.67% of KHSB.
On April 29, KHSB said in a note to Bursa Malaysia, that KDEB had offered to purchase 254.56 million ordinary shares of RM1 each in KHSB under the takeover offer.
"The KDEB management feels that KHSB's assets are not well-managed, and with 100% ownership, this can be restructured," he said.
Khalid said KHSB has a land bank of over 2,800ha, with a gross development value of RM6bil.
He labelled the loan as a "bridging finance", which would help KDEB secure future loans from banks at better rates.
"The 4% interest is higher than the interest we would get by parking the money in a fixed deposit (account).
"We can charge according to the base lending rate of 6.5%, but we want to show we have confidence in KDEB, so that in future, if KDEB needs a bank loan, the interest rate would only be slightly higher than the rate we charged," he said.
He said KHSB's assets would be liquidated if the loan was not repaid within a year.
The loan is part of a RM761mil supplementary allocation passed by the state assembly on Friday.
Loans of RM80mil and RM24mil would also be given to Selangor State Development Corporation (PKNS) and Subang Jaya Municipal Council (MPSJ) respectively, while RM105mil was allocated to the state government's 20 cubic metres of free water programme for the period between May and December this year.