Ivory Prop cancels Plaza Rakyat buy

REDEVELOPMENT PLAN CANCELLED... Ivory Place Sdn Bhd has terminated its conditional acquisition and rehabilitation agreement (ARA) with Plaza Rakyat Sdn Bhd. Both parties signed the ARA in September 2013, which allowed Ivory Place to acquire the development rights for the long-abandoned Plaza Rakyat project in Jalan Pudu, Kuala Lumpur.

KUALA LUMPUR: Ivory Place Sdn Bhd, a 65%-owned unit of Ivory Properties Group Bhd (Ivory Prop), has terminated its conditional acquisition and rehabilitation agreement (ARA) with Plaza Rakyat Sdn Bhd (PRSB).

In a filing with Bursa Malaysia yesterday, Ivory Prop said both parties had not been able to come to an agreement to extend the conditional period of the ARA.

“Accordingly, the ARA has been terminated, [and] both Ivory Place and PRSB have acknowledged and will observe the terms and conditions therein to come to a satisfactory conclusion arising from the termination of the ARA,” it said.

In September 2013, Ivory Place signed the ARA with Plaza Rakyat to acquire the development rights from the latter for the 15.3-acre (6.15ha) parcel in Jalan Pudu for RM400 million.

Land owner Dewan Bandaraya Kuala Lumpur (DBKL) would be paid up to RM560 million for leasing the land to Ivory Properties.

However, the plan to redevelop the long-abandoned Plaza Rakyat hit a snag when DBKL said it did not recognise the ARA, and pointed out that AdamPrimus Chartered Accountants had no authority to negotiate with another party to take over the Plaza Rakyat project.

AdamPrimus is the receiver and manager appointed by the lenders of PRSB to call for a tender to rehabilitate Plaza Rakyat.

The ARA did not involve DBKL and AdamPrimus did not obtain DBKL’s approval to call for the tender.

In June this year, Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor reportedly said a new contractor had been appointed for the project.

At the time, Ivory Prop said it was unaware of any intention by the authorities to bring in other parties for the project, but believed its proposal took care of the best interests of all parties involved.

If Ivory Prop had been given the green light to rehabilitate Plaza Rakyat, the RM400 million that PRSB was entitled to receive from Ivory Prop would have gone towards settling all its debts.

Ivory Prop’s proposal would have also resulted in the settlement of Plaza Rakyat’s outstanding assessment fees and quit rents — Adnan had cited these payments as reasons for repossessing the Plaza Rakyat project, apart from its state of disrepair, which was causing health issues.

DBKL attempted to obtain vacant possession of the Plaza Rakyat site in 2010 after it unilaterally terminated its joint venture (JV) agreement with PRSB that year, but PRSB applied for and obtained an injunction from the High Court to prevent that and also sought arbitration.

DBKL maintained it had the right to terminate the agreement following PRSB’s non-performance.

The arbitration tribunal’s interim award late last year found the termination of the JV and lease agreement by DBKL valid.

PRSB then challenged the tribunal’s decision in the High Court and the matter was set for hearing on June 30, 2014.

The Plaza Rakyat project, first mooted by Datuk Hamzah Abdul Majeed and his wife Datin Freida Pilus in the early nineties, was postponed indefinitely after construction came to a halt when PRSB ran into financial difficulties due to the Asian financial crisis. The company ultimately went into receivership.

This article first appeared in The Edge Financial Daily, on August 7, 2014.