PETALING JAYA: It is back to the drawing board for the mammoth multi-billion ringgit Bandar Malaysia project, which experts believe will be resuscitated at a later date.
The property project, which was first introduced in 2015, was once shelved by the government back in 2017 after it was abruptly terminated.
On Wednesday, the Finance Ministry (MoF) and IWH-CREC Sdn Bhd (ICSB) mutually agreed to terminate the deal for the latter to buy a 60% stake in the Bandar Malaysia project that is located in the former Air Force base in Sungai Besi for RM7.4bil.
This was the second deal for Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC) for the Bandar Malaysia project.
A source, meanwhile, expressed his confidence that the Bandar Malaysia project will likely resume at a later date, given the uncertainties brought about by the current Covid-19 pandemic outbreak.
The source added that the deal was mutually terminated as the parties could not agree on the conditions precedent to proceed with the project. “The project will continue but it is a matter of when and what is the next step to be taken by all the parties involved,” the source said.
When contacted by StarBiz, TRX City Sdn Bhd, a 100% subsidiary of the MoF, declined to comment on its future plans for Bandar Malaysia.
IWH-CREC is a 50:50 joint venture between IWH and CREC, a unit of China Railway Group Ltd.
IWH, which is 63% owned by Credence Resources Sdn Bhd, is a vehicle controlled by Tan Sri Lim Kang Hoo, while the remaining 36.9% is owned by Johor state government’s Kumpulan Prasarana Rakyat Johor Sdn Bhd.
In a joint statement on Wednesday, TRX City and IWH-CREC announced that they had mutually agreed to terminate the deal for IWH-CREC to buy a 60% stake in the project.
It noted that the restated and amended share sale agreement for the acquisition of 60% shares in Bandar Malaysia Sdn Bhd (BMSB) had lapsed on May 6, 2021, since the conditions precedent in the agreement had not been fulfilled by the respective parties within the condition precedent period.
The deal for the sale of 60% shares of Bandar Malaysia to IWH-CREC was executed on Dec 17, 2019.
Both TRX City and ICSB have been working together to find solutions to preserve the partnership so as to realise the common vision of unlocking Bandar Malaysia’s potential.
However, despite such efforts, to date, the parties have not been able to mutually agree to the terms of the extension of the condition precedent period.
Thus, the agreement is now deemed null and void, according to the joint statement.
It is worth to note that IWH-CREC had earlier paid a deposit of RM1.54bil for the stake in Bandar Malaysia and would likely get a refund.
TRX City also maintained that it remains committed to realise the Bandar Malaysia vision, and any future business and commercialisation plans will take into account market conditions and the national socio-economic agenda.
This will ensure that it continues to play its role as a significant economic enabler that will add substantive benefits for the country.
Meanwhile, CREC noted that it will continue to work closely with TRX City in respect to any future cooperation in Malaysia while IWH will continue to support the government in its nation-building.
Following the mutual termination of the agreement, Ekovest Bhd yesterday announced that it will not proceed to buy into IWH-CREC.
In a filing with Bursa Malaysia, Ekovest said it will “no longer proceed” with its heads of agreement (HoA) with IWH.
The agreement included Ekovest taking up a 40% stake in a special-purpose vehicle, which would in turn control 50% interest in IWH-CREC.
“The company wishes to announce that it has been notified by IWH on July 15, that the restated and amended share sale agreement executed between TRX City and IWH-CREC had lapsed,” said Ekovest.
“Consequently, the company and IWH will no longer proceed with the HoA dated Dec 8, 2020, as it is now deemed null and void,” it added.
Both IWH and Ekovest are controlled by Tan Sri Lim Kang Hoo.
Meanwhile, shares of Ekovest and Iskandar Waterfront City Bhd closed unchanged yesterday.
It has been a long six-year journey for IWH-CREC to acquire a stake in the Bandar Malaysia project. This is the second time the agreement for the project lapsed.
The first deal was struck in December 2015, when IWH-CREC wanted to buy the 60% stake in the Bandar Malaysia project for RM7.41bil from 1Malaysia Development Bhd (1MDB). However, the agreement lapsed after 16 months in May 2017.
A year later, after the change of government in the 14th General Election, IWH-CREC was back in the race and signed the restated and amended share sale agreement for the equity sale in December 2019.
After 17 months, the restated and amended SSA was mutually terminated.
The previously suspended Bandar Malaysia project was revived in 2019, with an estimated gross development value of over RM140bil.
It is an integrated development that sits on the single-largest tract of 486 acres of premium land in Jalan Sungai Besi.
The high-speed rail was said to be one of the main components of the Bandar Malaysia project that has been earmarked as a regional hub for multinational companies.