WCT buys TRX land for RM223mil to be paid by contract works
PETALING JAYA: WCT Holdings Bhd, which has been awarded an RM755mil contract to undertake infrastructure works on the Tun Razak Exchange (TRX) development in Kuala Lumpur, has entered into an agreement to purchase a piece of land in the property as part of the settlement.
The construction group said in an announcement yesterday that it had proposed to buy 1.65 acres in TRX via its indirect wholly owned subsidiary WCT Precious Development Sdn Bhd (WCTPD) from 1MDB Real Estate Sdn Bhd for RM223mil or RM3,098 per sq ft (psf).
In the same announcement, WCT also said its wholly owned subsidiary, WCT Bhd (WCTB), had accepted a letter of award worth RM754.83mil from 1MDB Real Estate for the proposed construction and completion of infrastructure and roadway works at TRX.
According to WCT, its TRX land purchase, which would likely be completed by the fourth quarter of 2017, would be financed by way of contra against a corresponding milestone payment as agreed under the contract for infrastructure and roadway works in the property. The contract sum would be paid via three milestone payments according to work done.
“The purchase consideration for the land purchase will be payable by WCTPD by way of set off against the corresponding milestone payment of the contract sum payable by 1MDB Real Estate to WCTB under the infra contract, and therefore, the land purchase will not have any material impact on the gearing of the WCT Group,” it said.
WCT said its proposed acquisition of the TRX land, which came with a plot ratio of 10.8, was part of the company’s strategy to seek continuous business opportunities with development in prime locations with strong growth and earnings potential.
It pointed out that its proposed development, which would comprise a tower block of high-end serviced apartments with complementary retail components, had an estimated gross development value of RM1.1bil.
Meanwhile, works under the infrastructure and roadway contract would commence tomorrow and will be completed within two years from the commencement date.
WCT said that in the event the sale and purchase agreement (SPA) is terminated due to no fault or breach by WCTPD, the parties would negotiate for an alternative piece of land within the TRX development. And in the event the negotiations for the sale and purchase of an alternative plot fall through, payment of the contract sum would revert from the milestone payments to periodic interim progress payments.
On the other hand, in the event the Infra Contract is terminated, WCTPD may elect either to terminate or to complete the SPA, the group said.
The land purchase, however, is subject to the approval of the Economic Planning Unit.
1MDB Real Estate Sdn Bhd’s parent 1Malaysia Development Bhd (1MDB) is currently undergoing a rationalisation exercise to pare down its debt. The heavily indebted state investment fund, which has debts totalling RM42bil, has been putting its assets, including land and power plants, up for sale to manage its cash-flow problems.
In the TRX development alone, three deals had taken place before that of WCT.
WCT is now paying for the land at a much lower price compared with Affin Holding Bhd’s 1.25-acre purchase for RM4,699 psf in August and Indonesia’s Mulia Group 3.4-acre deal for RM4,490 psf in May. WCT’s deal, however, is slightly higher than Lembaga Tabung Haji’s TRX 1.56-acre purchase for RM2,780 psf in May this year.