S P Setia's proposed land buy hits snag

KUALA LUMPUR (Dec 14): S P Setia Bhd's proposed acquisition of 1,010.5 acres (409ha) in Ulu Langat, Selangor for RM330.13 million hit a snag when the vendor did not agree to an extension of time for the transaction to fulfil certain conditions precedent to complete the deal.

The company, which is a target of an ongoing takeover exercise by Permodalan Nasional Bhd (PNB), told Bursa Malaysia on Tuesday the vendor did not agree to an extension of the period for the fulfilment of conditions precedent to the transactions that included the approval of the Estate Land Board to be obtained for the sale and transfer of the land.

The vendor in the transaction is another property development company, Ban Guan Hin Realty Sdn Bhd.

"The purchaser is currently seeking legal advice on its position under the SPA and will seek the appropriate relief from the court, if necessary," S P Setia said.

S P Setia announced the proposed acquisition of the land from Ban Guan Hin Realty in August this year, two months before PNB launched a general offer for the rest of the shares in the property development company that it did not own. PNB was already the single largest shareholder in S P Setia and launched the takeover at RM3.90 per share after it crossed the 33% threshold.

S P Setia's acquisition price valued the land at RM7.50 per square foot. It plans to undertake a mixed residential township development project with an estimated gross development value of RM3.5 billion.

According to its previous announcement to the local stock exchange, S P Setia said the proposed acquisition, which will be funded entirely in cash, offers a good opportunity to tap into strong demand for attractively priced homes by first-time owners and other home buyers in the Semenyih-Kajang corridor.

"The proposed acquisition also allows the group to further reinforce and expand its core business by replicating its proven township development model in an emerging growth corridor that is not presently served by the group's more matured projects in the Klang Valley," it said.

S P Setia pointed out that it had established a good reputation for delivering quality homes within its projects. S P Setia is known for its development of Setia Alam township project located at the Shah Alam-Klang corridor where prices have escalated since its development seven years ago.

On the proposed land that it is acquiring, S P Setia said the terrain of the land is generally undulating and is zoned for mixed housing development. According to S P Setia, the land is located midway between Semenyih, Bangi old town and Beranang. It is 12km south of Kajang town and 25 km south from here.

As at Oct 31, S P Setia had a total of RM1.44 billion cash and deposits and RM1.35 billion long and short-term borrowings as well as bank overdrafts. This translates into a net cash of some RM90 million.

The counter closed one sen or 0.26% lower at RM3.85 on Tuesday with a total of 2.3 million shares changing hands.