No Formal Termination Yet By Pdc On Batu Kawan Deal Says Sunway

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The Penang Development Corporation has terminated its joint agreement with Umech Land Sdn Bhd for the development of Batu Kawan Industrial Park 2. (Facebook pic)PETALING JAYA: Sunway Bhd said its 70%-owned subsidiary Umech Land Sdn Bhd has not yet received a formal letter of termination from the Penang Development Corporation (PDC) regarding their joint agreement for the development of Batu Kawan Industrial Park 2 in Penang.
In a local bourse filing today, Sunway said it will be able to provide clarity on the issue once Umech Land has received and reviewed the letter from PDC.
The filing was made after the Penang government had called off the joint development agreement earlier today, following a change in Umech Land’s shareholding.
On Sept 27, Sunway announced that Umech Land and PDC had inked a joint development agreement to co-develop a 226.2ha land in Batu Kawan into an industrial park with a gross development value of around RM3.5 billion.
Just two days prior to this announcement, Sunway had emerged as a majority shareholder (70%) in Umech Land via its wholly owned subsidiary Sunway Bukit Gambier Sdn Bhd.
The acquisition reduced the stakes of Umech Land’s two other shareholders Karen Cheng and Nathaniel Rajakumar to 21% and 9% respectively. Previously, Cheng and Rajakumar held a 70% and 30% interest in Umech Land.
Three-month notice
In a statement today, PDC said it had decided to terminate the joint development agreement following a board meeting yesterday.
“The change of majority stake in Umech Land, to an extent the controlling stake, without PDC’s prior approval is a serious issue that the PDC board is unable to accept,” the statement read.
PDC said it has since given Umech Land a three-month notice following the termination decision.
The land sale became controversial following claims that it was sold at below market rate through direct negotiation.
PDC said it would now open up the land to be developed through a request for proposal (RFP) for the Batu Kawan Industrial Park 2 project, which would be advertised soon.
At market close today, Sunway’s share price was unchanged at RM1.90, giving it a market capitalisation of RM9.5 billion. - FMT

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