Ageson’s RM279m industrial land disposal called off

• Regarding the aborted sale of the proposed 33 industrial lots, the company was to pay MBI Perak RM72 million.

KUALA LUMPUR (May 12): Over a year and a half after penning a deal to dispose of a 168-acre piece of industrial land in Perak to China’s Zhejiang Guorong Digital Economy Group Ltd (ZGDEG), Ageson Bhd says the RM278.78 million land sale has been terminated.

The agreement inked between Ageson’s 75%-owned subsidiary Ageson Holdings Sdn Bhd (AHSB) and ZGDEG, which proposed AHSB to build 33 industrial lots with a gross development value of RM278.78 million, was mutually terminated by the pair, according to Ageson’s bourse filing on Thursday (May 11).

“The agreement shall be terminated immediately and cease to be enforceable,” the construction outfit said, adding that the mutual termination was due to the prolonged delay in obtaining the requisite approval for the proposed development.

The sale and development agreement was subject to requisite construction approval from the Batang Padang district council and land office, as well as the Federal government.

The 168-acre land is part of a larger 475-acre parcel owned by Menteri Besar Inc (MBI) Perak.

The state-owned company granted AHSB exclusive development rights to carry out a mixed development project comprising government agencies and administration units, industrial, commercial and residential at its sole discretion — subject to the state government’s approval.

Pursuant to the development rights agreement with MBI Perak, AHSB is to pay 20% of the gross development value (GDV) of the proposed development. Regarding the aborted sale of the proposed 33 industrial lots, the company was to pay MBI Perak RM72 million.

AHSB previously said it would finance the development construction works via the progress payments it was to receive from ZGDEG. Moreover, it had reasoned this would allow the company to conserve cash and channel it towards financing day-to-day operations.

For the 18-month period ended Dec 31, 2022, Ageson posted a hefty net loss of RM165.95 million on revenue of RM52.17 million. The company’s assets stood at RM367.41 million, while liabilities stood at RM129.38 million.

Shares in Ageson last traded at three sen on May 9, valuing the company at RM9.35 million. The counter was suspended on May 10 after it failed to issue its annual report for the year ended Dec 31, 2022 on time, as it could not find an auditor to audit its financials.

Its last auditor STYL Associates PLT resigned four months into the job in February this year, after being appointed in November 2022, due to “resource constraints” on the auditor’s part, according to the company.

In its search for a new auditor, the company approached 16 potential auditors but noted that “the majority of the auditors' responses were negative due to resource constraints of the respective firms”, it said in a bourse filing on April 25.

Meanwhile, back in January last year, Ageson aborted its sand supplies deal valued at an estimated aggregate of RM27.96 billion, citing high shipping costs caused by the Covid-19 pandemic.

The company said the decision to discontinue the supplies of sand pursuant to the sand supply contracts was not expected to have any material effect on its consolidated earnings and net assets per share for the then financial year ending June 30, 2022, claiming it had not commenced the sand trading business, and the sand offer letters were not definitive agreements nor legally-binding commitments.

It is worth noting that in July 2020, Ageson had inked a joint venture agreement with Menteri Besar Kedah Inc to undertake the mining, supply and exportation of silica sand.