ZECON Properties Sdn Bhd, a wholly-owned subsidiary of Zecon Engineering Bhd, has proposed to acquire Zalpoint Corp Sdn Bhd for RM53mil cash.
Zalpoint, a company involved in turnkey construction and the trading of property, has a concession agreement with the Sarawak government to design, build and hand over to the state government the second Kuching bridge.
The construction of the bridge began in 1998 and the project was 70% completed as at end-November 2002. It is expected to be completed at the end of August at a total development cost of RM91mil and to generate a profit of RM45mil (the respective values being subject to due diligence).
Upon completion of the bridge, Zalpoint will be given 30 years to operate the toll concession with the option to extend for a further 19 years.
In consideration of the bridge project, Zalpoint has alienated four pieces of land within the immediate vicinity of the concession area and subsequently sold the land to three companies, all of which are to be acquired by Zecon Properties for RM2 cash each.
The three companies Zalpoint Petra Jaya Sdn Bhd (ZPJ), Zalpoint Tanah Putih Sdn Bhd (ZTP) and Zalpoint Demak Jaya Sdn Bhd (ZDJ) are involved in property development and construction and have land banks in Sarawak.
The open market values of the lands held by ZPJ, ZTP and ZDJ as valued in January 1999, are RM34mil, RM35mil and RM97.4mil respectively.
Zecon said the proposed acquisitions would complement its core activities of foundation engineering, civil engineering and building contracting works, and provide intra-group synergies. It will also enhance the future earning potential and long-term cash flow of the group.
Zecon said that when completed, the second Kuching bridge would offer a faster linkage between Petra Jaya and Kuching City.
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