TSR Capital in land swap with govt

KUALA LUMPUR: Property developer and builder TSR Capital Bhd, together with Lembaga Tabung Angkatan Tentera (LTAT) and bumiputera-owned Pembinaan Bukit Timah Sdn Bhd (PBT), will redevelop the existing 1,007-acre (407.52ha) air force base in Butterworth, Penang into an integrated mixed-use project with a potential gross development value (GDV) of more than RM10 billion.

TSR said in its announcement to Bursa Malaysia yesterday that it had received the government’s approval in principle to set up a joint-venture (JV) company to enter into negotiations with the latter to redevelop the Royal Malaysian Air Force (RMAF) base as part of a proposed land-swap deal with the federal government.

The three companies will also develop a new RM3 billion air force base for the RMAF near mainland Penang. Under the partnership, TSR Capital will have a 51% stake in the JV, while LTAT and PBT will hold the remaining 30% and 19% respectively.

“The government will be able to participate in the redevelopment of the government land through LTAT’s equity interest in the JV company,” said TSR Capital in the filing.

Under the deal, the JV will undertake to relocate the existing air force base and reconstruct it on land to be identified. “The JV company will [also] design, build and finance the development and construction of the new air force base. The government will pay the JV company for the new air force base through a land swap at current market value of government land.

“The government land includes, but is not limited to, a tract measuring 1,007 acres where the existing RMAF Butterworth is situated,” it added.

According to TSR Capital group accountant Ng Kim Keong, the location of the new air force base will be “not far from mainland Penang” and the JV company will serve as the master developer of the redevelopment of the government land.

Ng told The Edge Financial Daily yesterday that negotiations on the deal are expected to be finalised in a year. “All this is subject to approval by all parties. We need to get approvals on the cost, design and so on before we can start construction,” he said, adding that construction of the new air force base will take about four years.

On the land where the existing air force base is located, Ng said the proposed mixed-use development is estimated to have a GDV of more than RM10 billion, and that project will only start after the new air force base has been completed and the existing RMAF Butterworth base, which remains operational for now, is relocated.

On the reasons for the relocation, Ng said the existing air force base is near residential areas and the RMAF equipment as well as buildings are not up to date and need fixing.

The company added that it will provide further details after definitive and conclusive terms have been agreed upon and a formal agreement has been entered into by the parties.

TSR Capital’s share price had moved up 10 sen, or 7.62%, to RM1.43 at the close of trading yesterday.


This article first appeared in The Edge Financial Daily, on February 06, 2014.