PETALING JAYA: China Railway Group Ltd said the company and its joint-venture partner Iskandar Waterfront Holdings Bhd (IWH) will pay a combined RM5.28bil for their controlling 60% equity interest in Bandar Malaysia Sdn Bhd.
The figure, as disclosed by China Railway in its filing yesterday to the Hong Kong Stock Exchange, however, was lower than the RM7.41bil price tag announced on Thursday.
The discrepancy, however, could be due to the omission of the relocation cost for the Sungei Besi land, which some analysts had estimated at more than RM2bil.
“RM7.41bil is the correct figure,” IWH managing director Tan Sri Lim Kang Hoo told StarBiz when contacted yesterday.
It is believed that the announcement by China railway refers to the equity value of the 60% stake in Bandar Malaysia, the master developer of the 486-acre piece of land in Sungei Besi.
However, the final equity value is to be negotiated before the deal is sealed by June.
On Thursday, a 60:40 consortium comprising Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC) signed a share sale and purchase agreement with 1MDB to buy the 60% share in Bandar Malaysia.
CREC is the Malaysian unit of China Railway.
Previously, 1MDB president and executive director Arul Kanda Kandasamy declined to comment on whether the consortium would have to inject further capital for Bandar Malaysia’s debt obligations of RM2.4bil on top of the RM7.41bil that it was paying.
In the statement last week, Arul said the RM150bil Bandar Malaysia development would be effectively 76% owned by Malaysians. Meanwhile, China Railway, as an international partner, would have a 24% stake of the project equity.
Under the terms of the sale and purchase agreement, 1MDB will receive a 10% deposit of RM741mil upon the execution of the sale and purchase agreement.
1MDB, which is wholly-owned by the Finance Ministry, would retain the remaining 40% stake for now, but there was an option of transferring it to the Ministry under 1MDB’s rationalisation plans, said Arul without going into further details.
The sale, alongside 1MDB’s recent disposal of its power unit Edra Global Energy Bhd to China General Nuclear Power Corp for RM9.83bil, will see the fund shed the majority of its RM42bil debt load and will be reflected in its full year financial statement for the period ended March 31, 2016.
Did you find this article insightful?