E&O negotiates to buy 54.6ha in Sungai Buloh from Sime Darb

KUALA LUMPUR: Eastern & Oriental Bhd (E&O) has entered into a non-binding memorandum of agreement (MoA) with a unit of Sime Darby Bhd for the purchase of 135 acres (54.6ha) of freehold land in Sungai Buloh.

In a filing with Bursa Malaysia, E&O said it will negotiate with Sime Darby Elmina Development Sdn Bhd on the terms of a sale and purchase agreement for the land, which is part of an 843 acre forming part of the Elmina West estate, in Mukim Sungai Buloh, Selangor.

“The development, if it materialises, will represent the first township development of the E&O group in the Klang Valley, which could be a vital new growth engine for the group.

“The land will be easily accessible via several major highways, [while] the City of Elmina is a 5,000 acre development located along the Guthrie Corridor Expressway in an area west of Kuala Lumpur,” said E&O.

Sime holds a 32% stake in E&O. The City of Elmina is the township developed by Sime Darby Elmina.

E&O said the MoA stipulates that neither E&O nor Sime Darby Elmina will solicit, negotiate or accept any offer from any other party for the 135 acres of land.

The exclusivity period will be for six months, or could be extended if agreed by both firms. E&O, however, said the sales and purchase agreement (SPA) is expected to be made in the first quarter of next year.

“In the event the SPA is not signed within the exclusivity period, the MoA shall automatically lapse and be of no further effect,” said E&O, adding that it will purchase the land using internally generated funds and/or borrowings.

E&O said that the purchase price for the land needs to be mutually agreed by both parties. In case they fail to do so, E&O and Sime Darby Elmina will appoint a single valuer to carry out valuation of the land. The valuation shall be final and binding.

The valuation will be based on the assumption that Sime Darby Elmina will construct all the major infrastructure contained in the master plan for Elmina West estate up to the boundaries of the land E&O plans to purchase.

In addition, Sime Darby Elmina shall complete the subdivision and conversion of land usage based on the master plan and cause the issuance of separate document(s) of title for the land.

This article first appeared in The Edge Financial Daily, on September 26, 2013.