A police helicopter hovering over the Bukit Jalil Stadium as police conduct an exercise to test their response to any untoward incidents during the upcoming SEA Games hosted here.
KUALA LUMPUR: The Employees Provident Fund (EPF) is taking an 80% stake in a joint venture (JV) with Malaysian Resources Corp Bhd’s (MRCB) subsidiary Rukun Juang Sdn Bhd to develop a RM20.67bil mixed development project in Bukit Jalil, Kuala Lumpur.
The land to be developed comprises the three parcels of land totalling 76.14 acres to be given by the Government to Rukun Juang as consideration for it undertaking the ongoing Kuala Lumpur Sports City privatisation project, which involves the refurbishment and upgrading of facilities at the National Sports Complex in Bukit Jalil.
In a filing with Bursa Malaysia, MRCB said its 85% owned subsidiary Rukun Juang would subscribe to ordinary and redeemable preference shares in the JV company, Bukit Jalil Sentral Property Sdn Bhd.
Rukun Juang will take a 20% stake while EPF’s unit Tanjung Wibawa Sdn Bhd will end up with 80%.
Bukit Jalil Sentral will buy the land from Rukun Juang for up to RM1.43bil, or RM430 per sq ft.
The shareholders - EPF and Rukun Juang - have agreed that Bukit Jalil Sentral will appoint a subsidiary of MRCB to be the management contractor for the design and construction of the future development to be carried out on the land.
They also agree to pay for the actual financing cost incurred by Rukun Juang in undertaking and implementing Project 1 (first phase) of the KL Sports City privatisation project.
The expected gross development cost, including financing cost but excluding tax, of Bukit Jalil Sentral’s project is RM14.66bil. This is expected to be funded via the JV company’s internally generated funds, debt financing, shareholders’ advances and equity financing.
On the rationale for the proposed JV, MRCB said it would be able to carry out a large-scale property development at a prime location and benefit from the support and profiling accorded to the proposed development by its JV partner, which is also its major shareholder (with a 33.4% stake in MRCB) and a sophisticated investor, namely EPF.
“Preliminary management estimates indicate a potential gross development value for the future development of the lands of about RM21bil over a development period of 20 years.
“Although MRCB’s interest in the lands and the future development on the lands would be diluted (to an effective shareholding of 17%) as a result of EPF’s participation in the joint-venture company, the proposed JV allows MRCB to carry out multiple property development projects concurrently and, at the same time, have the flexibility to reallocate its cash flows and resources efficiently among its projects,” the company said.
MRCB said the proposed JV would also reduce MRCB’s financial burden of having to finance the entire development project on the lands.
The proposed JV is expected to be implemented by the fourth quarter of 2017.
MRCB also has another JV with EPF, which is to develop the RM8bil town centre of the proposed Kwasa Damansara township on 64.3 acres in Sungai Buloh (the original size was 64.07 acres but is now larger following a subdivision).
MRCB is expected to have a controlling stake (70%) in the joint-venture company, Kwasa Sentral Sdn Bhd, but has yet to complete paying the balance subscription for its majority stake totalling RM737.88mil.
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