PETALING JAYA (Dec 22): The share price of Ho Hup Construction Co Bhd tanked on Wednesday after the Court of Appeal has reversed the High Court's judgment on declaring the joint development agreement (JDA) on a parcel of land near Bukit Jalil as void.
The property stock plunged 11% or eight sen to 61 sen. The counter rebounded from the low of 44 sen in March to the peak of 83.5 sen in August when Ho Hup won a courtroom battle with Malton Bhd for the ownership of its 60-acre plot of land in Bukit Jalil.
Howevever, in an announcement to Bursa Malaysia, Ho Hup said the Court of Appeal held that the JDA, Power of Attorney, and Undertaking and Endorsement (all dated March 16, 2010) did not amount to a "disposal" under Section 132C of the Act.
This implies that the JDA that Bukit Jalil Development Sdn Bhd (BJD) had entered with Pioneer Haven Sdn Bhd on the land in Bukit Jalil is still effective.
Pioneer Haven is a wholly-owned unit of Kumpulan Gapadu Sdn Bhd, which in turn is a subsidiary of Malton.
With the latest court ruling, this could mean that Ho Hup would not be able to reap the top value from the development of the tract, which is the key asset to regularise the company's financial position.
The freehold land is perceived to be the last trump card that Ho Hup has to help it to get out of the PN17 status.
Under the terms, Pioneer Haven would be solely responsible for the financing of the development. BJD would not have to fork out any money, and it would be entitled to at least RM265 million or 17% share of the project's gross development value (GDV).
However, the JDA does not stipulate the time frame of the payment of BJD's entitlement.
Ho Hup said in the announcement that it would file an appeal to the Federal Court.
When contacted by The Edge Financial Daily, executive director Derek Wong declined to comment on the ruling, but said Ho Hup is preparing its next course of action to bring the matter to the Federal Court.
He did not want to reveal the company's next move and said Ho Hup might call for a press conference at a later date.
The latest ruling by the Court of Appeal seems to indicate that the legal battle faced by Ho Hup is far from over.
While the shareholder tussle appears to have ended after Datuk Vincent Lye's investment vehicle Extreme System Sdn Bhd exited the company by selling its 20.59% equity stake to Formis Resources Bhd in July.
Things improved further at Ho Hup as it managed to get a RM75 million financing facility from Insas Bhd.
Insas' unit Insas Credit & Leasing Sdn Bhd extended a RM75 million financing facility to Ho Hup's subsidiary which would help ease the property developer's financial stress.
In fact, Ho Hup paid off its outstanding loan with CIMB Bank Bhd amounting to RM72.6 million.
Also, Insas, which is controlled by Datuk Thong Kok Khee, has emerged as a substantial shareholder of IT-based firm Formis, which recently acquired a 20.59% equity stake in Ho Hup.
The critical part of the restructuring plan is the emergence of a new shareholder, Raymond Tan, a familiar name in the property development industry.
Tan is perceived to be the white knight, who will be injecting two property companies into Ho Hup in return for a 29.44% equity stake, being the single largest shareholder.
But the latest court judgement raises the question if Tan is still keen on Ho Hup if the company has to jointly develop the land with Malton, which will play a dominant role in the development.
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