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UDA has to borrow to pay Pudu Jail premium

KUALA LUMPUR: UDA Holdings Bhd will probably have to resort to bank borrowings to come up with the outstanding RM104 million premium for the 8ha Pudu Jail land it is due to pay the government in September.

According to an industry observer, the government rejected UDA's request for a waiver on the premium.

"Except for an injection of capital from the government, UDA has no choice but to resort to borrowings," said the observer, pointing out that it would add to UDA's total liabilities of about RM900 million. He also said UDA could resort to divesting its assets as it holds some properties in the centre of the city.

On Wednesday, July 20, the Ministry of Finance (MoF) vetoed UDA's proposal to divest 1.4ha of prime land in Jalan Sultan Ismail to Nadayu Properties Bhd (formerly known as Mutiara Goodyear Development Bhd). UDA had banked on the sale to raise the RM104 million due in September. If it is unable to come up with the money, the government may revise the Pudu Jail land premium to its current market value of RM600 million.

"We understand that MoF vetoed the land sale because Nadayu did not have the appropriate bumiputera shareholding," said the observer.

UDA chairman Nur Jazlan Mohammad Rahmat had come under fire from a bumiputera rights group and Umno Youth who said the sale would sideline bumiputera interests in prime city real estate.

Nur Jazlan observed rather bitterly: "The government can call for a tender and sell its land to non-bumis but UDA is only supposed to sell to bumiputeras. The inconsistency is that if the government sells its land to anyone, that is considered government policy. But UDA, as a government company, is not allowed to do so. If this is indeed government policy, it should not be applied in this arbitrary manner."

He maintained the decision to sell the land was purely a commercial one that was in the interests of UDA.

UDA was established in 1971 as the Urban Development Authority to promote planned urban development. It was eventually privatised in 1996 and listed on Bursa Malaysia three years later.

Once UDA was privatised, it stopped receiving government assistance in the form of cheap land and hundreds of millions of ringgit in grants. It was delisted in 2007, becoming a wholly-owned subsidiary of Khazanah Nasional Bhd, but the company was expected to stand on its own.

UDA has not purchased any new land since 1996 because it has not generated enough earnings to replenish its landbank. It still has a landbank of about 450ha but Nur Jazlan pointed out that not all of this land is located in areas that are viable for development. The most prized pieces of land include parcels in Bandar Tun Hussein Onn, Cheras (81ha remaining), Bandar UDA Utama in Johor (121ha) and the Pudu Jail site (8ha).

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