Magna Prima sets 1H2027 target for RM700m restructuring of 8 Conlay

KUALA LUMPUR (Aug 14): Magna Prima Bhd (KL:MAGNA) said its wholly-owned unit Permata Juang (M) Sdn Bhd (PJSB) has entered into a rehabilitation agreement to take over and complete the stalled 8 Conlay mixed-use development in Kuala Lumpur, in a restructuring exercise capped at RM700 million.

The exercise will see PJSB issue RM700 million in redeemable secured loan securities (RSLS) in lieu of cash to satisfy the assumed liabilities.

In a bourse filing on Thursday, Magna said it expects the restructuring to be completed by the first half of 2027 (1H2027), subject to conditions being met.

Magna said PJSB signed the agreement with Damai City Sdn Bhd (DCSB), which is the project's original developer and was placed in liquidation with receivers and managers appointed, and a newly designated special-purpose vehicle (SPV) called Delta 8 Sdn Bhd (DSB) that will hold the land and development undertaking going forward.

Under the arrangement, Magna said DSB will take over the land and development assets from DCSB, while PJSB will be granted exclusive development rights to finance, construct and commercialise the project without assuming legal title to the land, which remains with DSB.

PJSB will also take over as developer under the existing purchasers' sale agreements, effectively replacing DCSB.

In place of a cash purchase price, Magna said PJSB will assume liabilities capped at RM700 million owed by DSB to DCSB, to be settled through the issuance of RSLS to a security trustee for the benefit of Malayan Banking Bhd (KL:MAYBANK) and Bank Pembangunan Malaysia Bhd (BPMB) as secured lenders.

Separately, PJSB will pay a RM70 million cash covenant, of which RM14 million was paid before the agreement was signed and RM21 million upon signing, with the remaining RM35 million due on completion.

Magna will provide a corporate guarantee over PJSB's payment obligations under the RSLS.

In the filing, the RM700 million figure was arrived at with reference to an independent valuation of the land and existing structures at RM721 million as at June 23, 2025, based on the residual method.

The restructuring is structured as part of a scheme of arrangement under Section 366 of the Companies Act 2016, to be proposed by DCSB's receivers and managers and sanctioned by the High Court of Malaya.

Completion is conditional on, among other things, court approval of the scheme, Magna shareholder approval, consent from the secured lenders, and the removal of a private caveat currently registered against the land. The group said these conditions must be met within three months of the agreement, extendable by a further three months, with any longer extension requiring the parties' mutual consent.

Magna said the exercise carries a highest percentage ratio of 214.85% under Bursa Malaysia's Main Market Listing Requirements, based on the RM700 million entitlement against the group's latest audited net assets, and will therefore require shareholder approval at an extraordinary general meeting.

The group's gearing ratio, currently nil as at end-2025, is expected to rise to 1.99 times following the issuance of the RSLS. Magna said the deal will not affect its share capital or net assets, but is expected to contribute positively to future earnings once the project is completed and commercialised.

In the filing, Magna stated that the rehabilitation agreement “is in line with the group’s core property development activities and enables PJSB to participate in the rehabilitation, completion and commercialisation of the development by leveraging the group’s property development capabilities and resources”.

Project in distress for several years

The 8 Conlay project sits on 3.65 acres of freehold land in Kuala Lumpur and comprises Tower A, Tower B, a hotel tower and suites, and a retail podium. As construction was disrupted by terminated contracts and DCSB's financial troubles, the project was left in a partially completed state.

Based on costs incurred, Magna said the retail podium is 70.21% complete, along with other parts of the development that are unfinished: Tower A (64.69%), Tower B (49.61%), the hotel component (45.91%) and the hotel suites (22.34%).

DCSB had previously sold 404 units in Tower A and 160 units in Tower B to existing purchasers under signed sale and purchase agreements.

In November 2015, KSK Land, the property arm of KSK Group, launched the development, positioning it as an integrated luxury project anchored by twin twisted-tower residences. Its proximity to high-end lifestyle mall Pavilion Kuala Lumpur made it attractive to would-be buyers.

GDB Holdings Bhd (KL:GDB) was appointed as the main contractor in November 2020 under a RM1.25 billion deal, and construction initially progressed, with Tower A reaching structural completion by late 2021.

The relationship between KSK Land and GDB broke down in 2022 over payment disputes, leading to a work stoppage, competing lawsuits, and an eventual termination of GDB’s contract in April 2023.

A replacement contractor, Conlay Construction Sdn Bhd, was brought in mid-2023 with a revised completion schedule, but no further progress updates followed publicly. Adjudication rulings through 2023 to 2025 found in GDB’s favour for tens of millions of ringgit, and GDB pursued winding-up proceedings against KSK Land.

Receivers and managers were installed over the project’s assets in January 2024, stripping KSK Land founder Tan Sri Kua Sian Kooi and his family of authority over the site.

The receivers put the project up for open tender in August 2025, drawing interest from several developers even as KSK Group maintained it was still pursuing its own rescue plan for the site.

DCSB was placed under the winding-up order last month.

Shares of Magna Prima were up by three sen or 4.2% to 75 sen at the time of writing on Friday, valuing the property developer at RM301.1 million.

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