Ho Hup receives nod for regularisation plan

KUALA LUMPUR: Ho Hup Construction Company Bhd is one step closer to exiting PN17 status, having received the nod for its financial regularisation plan yesterday from Bursa Malaysia.

In an announcement yesterday, Ho Hup said Bursa had given conditional approval of its proposed regularisation, which comprises a par value reduction of 50 sen, rights issue of 102 million irredeemable convertible preference shares with 51 million warrants, and the issuance of 136.63 million redeemable convertible preference shares — for the proposed scheme of arrangement with creditors.

The company was first admitted into PN17 status on Aug 1, 2008 for having an inadequate level of operations and financials.

There were several attempts to restructure the construction outfit but these were bogged down by the bitter takeover fight between the family of former Ho Hup managing director Datuk Low Tuck Choy and businessman Datuk Vincent Lye.

Low finally won back control from Lye in March 2010, but Ho Hup then became embroiled in a dispute with Malton Bhd over a development agreement signed earlier by the Lye-led management. The issue was settled in July last year when Ho Hup reached a truce with Malton and entered into a new agreement to jointly develop 60 acres of prime land in Bukit Jalil.

Under the new agreement, Ho Hup retains the sole development rights to a 10-acre tract out of 60 acres, with the remaining 50 acres to be jointly developed by Ho Hup and Malton. The former will provide land while the latter will provide capital.

The new agreement also saw Ho Hup, the owner of the 60 acres, increasing its entitlement for the GDV of the project from 17% to 18%. It was previously estimated that the total GDV for the project was RM4 billion over an eight-year period, but the figure is believed to be much higher now.

Ho Hup closed at 74 sen yesterday, up 5.71% from last Friday. It has a market capitalisation of RM75.5 million.

This article first appeared in The Edge Financial Daily, on May 14, 2013.

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