KUALA LUMPUR (March 23): Ekovest Bhd said its proposed acquisition of 96.28 acres of freehold land in Pulai, Johor from Iskandar Waterfront Holdings Sdn Bhd for RM1.11 billion has fallen through.

The related party transaction, proposed to expand Ekovest’s landbank in Iskandar Malaysia, had faced hiccups since it was first proposed in November 2019.

The scrapping of the deal is also an indication of the impact of Covid-19 towards the property market.

“Although the parties have continued to reassess and renegotiate the terms of the proposed acquisitions after the lapse of the conditional period on Feb 20, 2021, the parties were unable to reach an agreement to-date and have therefore decided to allow the sale and purchase agreements to lapse,” Ekovest said in a filing yesterday.

The initial deal was for Ekovest to acquire 90.95 acres across 20 plots for a sum of RM1.05 billion, to be satisfied via RM200 million cash and issuance of 849.89 million irredeemable convertible preference shares (ICPS) in Ekovest to IWH at RM1 apiece or RM849.89 million.

However, the consideration was raised to RM1.11 billion, after it was found that the land parcels were bigger than initially stated, at 96.28 acres. The additional price was also to be satisfied by additional ICPS.

In July 2020, the two companies had to further negotiate, as the pandemic caused the valuation of the land parcels to be reduced and prompted Ekovest to reduce the proposed acquisition price by 10.2% to RM996.65 million – to which IWH disagreed.

IWH conversely pointed out to the loss of value in Ekovest share price by 35% to 53 sen when the price consideration was further negotiated, from 81.5 sen when the proposal was first mooted.

The two companies extended the conditional period from August 2020 to Feb 20, 2021.

”For shareholders’ information, while the non-interested board of Ekovest is unable to agree with IWH’s request to maintain the total purchase consideration and its mode of settlement for the lands at this juncture, it remains the intention of the company to acquire the lands, given the strategic location and prospects of the lands which are located within the Johor Bahru Waterfront development overlooking Singapore and skyline of the Johor Bahru city centre,” Ekovest said at the time.

While the deal has fallen through, Ekovest said it may continue to explore other options in connection with the land parcels.

Shares of Ekovest fell half a sen or 1.03% to 48 sen yesterday, valuing the property developer at RM1.29 billion.

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