Kenanga deems Mudajaya-Mulpha JV ‘fair’ and ‘reasonable’

KUALA LUMPUR: Kenanga Investment Bank Bhd (Kenanga IB), the independent adviser appointed by Mudajaya Group Bhd in relation to the proposed joint venture (JV) between Mulpha Land Bhd and MJC Development Sdn Bhd (MJC), said the JV is “fair” and “reasonable” and not detrimental to the interest of the minority shareholders.

In a filing with Bursa Malaysia yesterday, Kenanga IB said it had stated in an independent advice letter that as the proposed JV would enable the Mudajaya group to enhance its foothold in the property industry and contribute positively to the future earnings of the group, “we are of the view that the rationale for the proposed JV is fair and reasonable and not detrimental to the shareholders of the Mulpha group”.

To recap, Mudajaya had on Aug 30 proposed a subscription and shareholders’ agreement with Mulpha Land, whereby MJC and Mulpha Land would subscribe for 49% and 51% of the enlarged issued and paid-up share capital of Mayfair Ventures Sdn Bhd, a wholly-owned subsidiary of Mulpha Land.

Mulpha Land and Mudajaya share the same holding company, Mulpha International Bhd.

On Aug 26, Mudajaya appointed Kenanga IB as the independent adviser to advise the non-interested directors and the non-interested shareholders of Mudajaya on the fairness and reasonableness of the proposed JV and whether it was to the detriment of the non-interested shareholders of the group.

Under the JV agreement, Mudajaya’s wholly-owned subsidiary MJC and Mulpha Land would inject up to RM60 million as working capital into Mayfair based on their respective shareholding proportions.

“We also take note that the RM980,000 for subscription of the Mayfair shares, RM245,000 for subscription of the Mayfair redeemable preference shares (RPS) and the MJC premium constitute part of MJC’s share of the total working capital of RM29.4 million,” said Kenanga IB, adding that the remaining balance to be paid by MJC as working capital will be RM22.6 million.

“The total estimated cost to be incurred by MJC under the proposed JV is RM35.2 million.”

Mudajaya expects the proposed JV to be completed by the fourth quarter of 2013.  It is worth noting that the JV entails a joint development of two parcels of land in Petaling Jaya, measuring 6.41 acres (2.59ha), for a commercial project with an estimated gross development value of RM700 million.

This article first appeared in The Edge Financial Daily, on November 28, 2013.


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