Tradewinds terminates 7-yr-old JV with Oxbridge

KUALA LUMPUR: Tradewinds Corp Bhd (TCB) has terminated an over seven-year-old joint venture agreement (JVA) with Oxbridge Height Sdn Bhd in relation to the development of about 704 acres of the former’s land in Tebrau, Johor after the latter had defaulted on its private debt securities (PDS) and non-settlement of a guaranteed payment.

In a statement yesterday, TCB, formerly Pernas International Holdings Bhd, said under the JVA, Oxbridge, as the developer of the land, had to make a guaranteed payment of RM250 million to TCB over a four-year period from March 2005 to 2008 to be entitled to the beneficial ownership of the land.

However, TCB said Oxbridge had paid only RM100.66 million and a sum of RM149.34 million remained outstanding. TCB had bought the land from Kelana Ventures Sdn Bhd for RM210 million via the issuance of RM210 million seven-year 2% irredeemable convertible unsecured loan stocks.

Of the total land area, about 162.87 acres have either been sold to end-purchasers or are in the midst of being transferred to Oxbridge. Under a settlement agreement signed between the parties yesterday, TCB will take possession of the remaining land in the development known as Bandar Jaya Putra Perdana.

Under a noteholders’ settlement agreement, TCB proposed to settle Oxbridge’s Murabahah underwritten notes and Islamic medium term notes facilities for a sum of RM107.5 million to the trustee, AmTrustee Bhd, as full settlement of the outstanding indebtness to the noteholders of RM111.52 million.

TCB said Oxbridge had defaulted on its obligations to the noteholders due to the economic crisis. Pursuant to TCB settling the PDS and in a land swap, Oxbridge has agreed to relinquish its beneficial interest on certain neighbouring plots of freehold land.

Oxbridge would still have to carry out certain obligations, including the launch of a new phase, and certain infrastructural works. TCB said it would be entitled to oversee the management of the cash flow from these activities, and a new joint management committee would be formed immediately.

TCB said the proposals were arrived at based on the market value of the remaining Tebrau land and the freehold plots, with all infrastructure and other work done, at RM278 million.

“The settlement agreement allows TCB to take control of the land and await better prospects in the near future while avoiding potentially lengthy and expensive court action to recover the encumbered land.

“The remaining Tebrau land and Oxbridge land can either be developed or sold when the Johor Bahru market recovers as the Mount Austin area continues to mature with development ongoing all around the location,” it said.

TCB said the proposals would result in it losing about RM15.75 million. Based on the audited accounts as at Dec 31, 2008, the proposals would raise its gearing ratio to 0.57 times from 0.51 times, while the group’s net assets would be cut by 1.42 sen from RM1.63 to RM1.62 per share.

The proposals are expected to be completed by the second quarter of this year.

This article appeared in The Edge Financial Daily, April 27, 2010.