KUALA LUMPUR (Nov 5): Tafi Industries Bhd has proposed a diversification of its operations to include property development and construction activities, via a conditional joint venture (JV) with E Prompt Sdn Bhd, for the development of a 33-acre (13.35ha) parcel of freehold land in Cameron Highlands.
The furniture manufacturer said its property venture will be spearheaded by its group chief executive officer (CEO) Datuk Seri Wong Sze Chien and group managing director Datuk Seri Azlan Azmi who, together with Datuk Seri Andrew Lim Eng Guan, who have emerged as controlling shareholders of Tafi after acquiring a controlling stake.
The three undertook a mandatory takeover offer for all the remaining shares in Tafi that they did not own, and it was completed on Oct 15.
Shareholders of the company’s potential JV partner E Prompt include Ng L’yp Hau (a 69% stake) and Desmond Chan Ying Choong (31% stake).
The land in Cameron Highlands is owned by Lake Gardens Sdn Bhd, which has already entered into a JV agreement with E Prompt for the development of the land and also allowed the latter to enter into joint development agreements (JDAs) with third parties for the project.
The gross development value (GDV) and gross development cost of the project amount to about RM390 million and RM260 million respectively.
Under the agreement, Tafi will be required to make a series of payments to E Prompt totalling RM2 million, which include RM1 million for the advertising permit and developer licence and RM500,000 upon obtaining the planning permission approval.
“Pursuant to the JDA, E Prompt shall be entitled to a range of 16% to 25% of the total number of completed units of apartments and townhouses built on the development land, being the main component of the development project,” Tafi said.
E Prompt will also be entitled to 35% of the completed units of shoplots, while Tafi will be entitled to all the remaining units built on the development land.
Taking into consideration challenges faced by the furniture business and its lacklustre financial performance in recent years, the group said the development project is in line with its controlling shareholders’ plan to expand its revenue stream and earnings base.
“The JDA serves as an entry point for the group into the property development business, and it is in line with the group’s strategic plans to explore opportunities and diversify the business of Tafi to include new business segments, such as property development, to enhance earnings of the group,” it said.
The group added that the JV project will also allow it to participate in development without an outright purchase of land.
At 3.32pm, Tafi was down half a sen or 0.7% at 65.5 sen, giving it a market capitalisation of RM52.4 million.
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