KUALA LUMPUR: Talam Transform Bhd (formerly Talam Corp Bhd), which was once debt-ridden when under the control of its founder, tycoon Tan Sri Chan Ah Chye, has pleaded to be given another chance, saying it has transformed and is on a much stronger footing now.
The property firm has crafted a RM5 billion, 10-year development plan at a time when Chan, now a director at Talam Transform, re-emerged as a substantial shareholder on July 24 this year. Chan now holds an 8.68% stake in the company and is proposing to buy an additional 19.9% stake in Talam Transform from Kumpulan Europlus Bhd (KEuro) for RM92.4 million or 11 sen per share.
“Give us a chance. We had never run away [from our commitment to homebuyers]. We have learnt from our past mistakes which saw us over-gearing ourselves to expand our land bank and trying hard at impressing people that we don’t even know,” Talam executive director Chua Kim Lan told The Edge Financial Daily in an interview.
“Certainly, there will remain some negative perceptions [of the company]. We don’t expect ourselves to be like other developers in the sense that when they launch new projects, buyers will have no doubt about their ability to deliver,” she said.
Talam Transform executive director Yaw Chun Soon said to date, all unfinished houses that were sold by Talam Corp have been completed and handed over to their owners.
“I supposed the easiest way then would be to just walk away and call it an abandoned project. We can take the short-cut and let the company down. Who would have wanted to save a RM4 billion debt-laden company? But we did it without a white knight,” he said.
“Has there been any public-listed company with RM4 billion of debts that was ever turned around? It was a disaster not of our own making, but we chose to fulfil our obligations,” said Yaw, who is former executive director of TA Enterprise Bhd.
The debt level of Talam Corp, once known as the country’s largest developer of low-cost housing, stood at RM3.7 billion in 2004. It has since pared down its debts to RM1.2 billion as at end-July this year.
This will be further brought down to RM300 million, once its locked-in asset sales such as Talam’s 85% stake in China’s Maxcourt Hotel Ltd are completed.
Talam Transform’s gearing ratio has fallen from as high as 3 times some 10 years ago to 0.4 times today.
Assuming the company is not getting any new loans, its gearing ratio could go down to about 0.1 times after the pending asset sales are completed.
Going forward, Chua said Talam will strategically reposition itself as a lifestyle developer to build high-end, service-oriented and value-added residential houses.
“We will not stick to affordable houses. The margin is too low, that was why we failed [the last time]. Now, we will follow the [market] trend and stay in tune with market demand,” she said.
Chua said for starters, the company plans to implement the build-and-sell housing development concept on a small scale. “When people see our properties, [and decide to] buy them, [they can then judge the quality of our performance].”
Talam Transform has an undeveloped land bank totalling 1,800 acres (728ha) across in Ampang, Bukit Jalil, Puchong, Sepang and Rawang with a net book value of more than RM900 million.
Yaw said the land bank in the Klang Valley carries an estimated gross development value of RM5 billion over the next 10 years, which focuses on township development with a mixt of landed properties and high-rise buildings.
It has submitted four re-planning development plans to the local councils in Selangor, paving the way to launch property projects worth RM2 billion to RM3 billion next year.
Some 300 acres in Putra Perdana, Ulu Kelang and Selayang have been earmarked as residential properties, while another 700 acres in Bukit Beruntung will be developed into an industrial park.
Chan is due to return to Talam Transform when he eventually becomes the controlling shareholder of the company with at least a 28% stake.
“Tan Sri [Chan] is a property man. His love is still with Talam and the property business. That’s the reason he wanted to buy back Talam Transform shares after he exited KEuro,” said Chua.
“In fact, Tan Sri [Chan] has never left. He is now increasing his stake and it is just a matter of time for him to be Talam Transform’s single largest shareholder,” said Yaw.
Currently, KEuro is Talam Transform’s single largest shareholder with a 23.54% stake.
This article first appeared in The Edge Financial Daily, on September 26, 2014.
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