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A costly wait for BLand

THE nine-year wait for the state government to approve the relocation of the Selangor Turf Club (STC) must have been a testing time for Berjaya Corp boss Tan Sri Vincent Tan, who won the tender to undertake the development of the tract and the relocation in 2004.

But it appears that the once sweet deal for the tycoon has turned out to be even more complicated, as it now involves a court case — something he probably didn't expect.

Early this year, three STC members filed a case against the club's officials, claiming they had acted in breach of trust by not terminating the sale and purchase agreement (SPA) with Selat Makmur Sdn Bhd (SMSB), which is a subsidiary of Berjaya Land Bhd (BLand).

Then, at an EGM in May, STC members passed resolutions on the sale of the existing land — where the turf club is located, to BLand, and on its relocation.

These developments, some quarters say, pose more hurdles for Tan in realising the redevelopment of the site near Sungai Besi.

An executive close to the deal tells The Edge, however, that STC has no plans to pull out of the deal, despite the delay in getting the necessary approvals for the new turf club. But he cautions that the club will not surrender the existing land until BLand fulfills the conditions set under the SPA.

As for the court case, the executive says the STC has complied with the SPA and has not breached any rules as alleged by certain quarters. Furthermore, he adds, the club had obtained the approval of members for the project in May.

Under the deal, SMSB is required to fulfil a set of conditions within six months after the agreement is signed, with a potential three-month extension. Since then, SMSB has been given nine extensions.

BLand's proposed mega project had drawn flak from the state government officials in the past.

In 2005, then senior executive committee councillor Datuk Abdul Rahman Palil had reportedly said that Selangor rejected the relocation of the turf club to Bukit Tagar, as it would promote gaming in the state.

Back in 2004, BLand won a tender from STC to relocate the turf club and to redevelop the 244.7 acres on which it stands.

The deal would involve BLand paying RM35 million in cash and building a horse-racing circuit and other facilities on a 750-acre tract in Bukit Tagar, in a land swap. The site is about 80km from Kuala Lumpur.

SMSB had also proposed to acquire BCity Land from Berjaya City Sdn Bhd (BCity) — a unit of Berjaya Corp, and to appoint BCity as the turnkey contractor of the new turf club.

However BLand has yet to get the necessary approvals, due to a change in the state government after the 2008 general election.

The long delay is expected to cost BLand more to undertake the project — from an estimated RM605 million previously, to RM1billion.

The company's latest annual report shows that BLand and its related companies have incurred and committed a total expenditure of about RM321 million to the proposals. Of the amount, RM6.5 million is for the design and professional consultancy fees, RM70 million for the Bukit Tagar interchange and toll plaza, RM4 million for the relocation of power transmission lines, RM196 million for the purchase of the Bukit Tagar land and RM44.9 million for site clearance and earthworks.

A check showed BCity Land's master layout plan, which was obtained on Feb 11, 2008, was initially planned to be retabled due to the change in the Selangor state government.

Without the state government's approval, the Majlis Daerah Hulu Selangor (MDHS) cannot process the development order, earthworks and infrastructure, and building plan pertaining to the construction of the new turf club.

This has affected approvals for the conversion and sub-division of BCity Land, which can only be tabled before the Selangor State Executive Council after getting the necessary approvals from the state and MDHS.

Despite the hiccups,STC andSMSB seem to be gaining traction in their negotiations.

They recently reached an agreement on the layout and building plans for the new turf club.

"The new turf club will emulate the design concept of a modern equestrian resort, like those in Japan," says the executive.

The present site that STC has occupied for the past 20 years, is no longer suitable as it needs a larger space, the executive adds.

The new site in Bukit Tagar would be able to accommodate almost double the number of horses, and the design would be more family-oriented to cater for a larger crowd.

Apart from the STC land, BLand bought 57 acres of freehold prime land from the Penang Turf Club (PNTC) in 2011, to make a comeback to Penang. However, checks showed that BLand has not made significant progress on the site.

The sale and purchase agreement between PNTC and BLand, proposes to develop a low-density exclusive gated housing development, comprising bungalows, semi-detached homes, two blocks of 10-storey condominiums and low-cost housing units. The project is expected to have a gross development value of RM1.52 billion.


This story first appeared in The Edge weekly edition of August 5-11, 2013.


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