KUALA LUMPUR: The Kuala Lumpur High Court has allowed Nusa Gapurna Development Sdn Bhd (NGD) to sell its 70% stake in PJ Sentral Development Sdn Bhd to Malaysian Resources Corp Bhd (MRCB) after it dismissed a suit by the Selangor State Development Corp (PKNS) yesterday.
PKNS, which holds the remaining 30% in PJ Sentral, had filed a suit against NGD and MRCB in June 2013 claiming that it has pre-emption rights over NGD’s 70% stake in PJ Sentral, and that MRCB had procured a breach of contract with NGD.
High Court judge Datuk Hasnah Mohammed Hashim, after hearing evidence from six witnesses, ruled that PKNS does not have pre-emption rights over NGD’s 70% stake, and that there was no procurement of a breach of contract by MRCB.
The judge also allowed Nusa Gapurna’s counter claim for PKNS to sell its 30% stake in PJ Sentral to MRCB.
She ordered PKNS to pay costs of RM100,000 to NGD and RM50,000 to MRCB. The High Court also declined to consider an oral application by PKNS for a temporary injunction to prevent the completion of the sale by NGD to MRCB, but instead directed PKNS to file a formal application.
An NGD spokesman told The Edge Financial Daily yesterday the effect of the High Court’s decision is that NGD is entitled to complete the sale of its 70% stake in PJ Sentral to MRCB. “Further, PKNS is obliged to sell its 30% stake in PJ Sentral to MRCB,” the spokesman added.
The lawyer representing NGD, Dinesh Bhaskaran, confirmed that NGD will now be able to proceed with its share sale to MRCB. He said PKNS had indicated its intent to appeal, and has a month to do so.
At an extraordinary general meeting in June last year, MRCB shareholders had approved the 70% stake acquisition in PJ Sentral, which will cost some RM729 million.
PJ Sentral sits on 12 acres (4.85ha) of prime land in Petaling Jaya and it is estimated to have a gross development value of RM3 billion. Several commercial blocks and a hotel have been approved for construction at the site.
PJ Sentral was privatised to NGD during the Barisan Nasional administration of Selangor. Under the initial terms, NGD was to build an office block for PKNS and pay some cash in return for taking over the land.
However, when Pakatan Rakyat took over Selangor in 2008, PKNS renegotiated the terms of the privatisation several times until it ended up with a 30% stake in PJ Sentral.
At the close of trading yesterday, MRCB shares gained 6.45% to end at RM1.65.
This article first appeared in The Edge Financial Daily, on February 28, 2014.