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KUALA LUMPUR: The vendor in a land transaction involving Mah Sing Group Bhd is taking steps to lift a suit that may stop the property developer from acquiring 1,352 acres (547ha) in Johor.
Mah Sing said in an announcement yesterday that the vendor, Bistari Land Sdn Bhd, is taking steps to settle the outstanding sum of RM11.6 million owed to the Malaysian Highway Authority (MHA).
Mah Sing on Oct 1 announced that it was acquiring the 1,352 acres for RM429.9 million. Subsequently, the price was adjusted down to RM411.2 million.
However, the company announced on Tuesday that Bistari Land was served with a winding-up petition by the MHA on the amount due, a move that could hamper the land transaction.
The public notice to wind up Bistari Land was out on Sept 30.
Analysts felt that the deal would not be jeopardised since the amount owing to the MHA was only RM11.6 million, a relatively small sum compared with the transaction value of RM411.2 million.
Kenanga Investment Bank reported yesterday that the petition was related to an overpaid compensation by the MHA to the vendors of the land for roads. The petition should result in a small difference in pricing and the amount should be small and negligible, it said.
“[Mah Sing’s] management believes there is very little risk of the deal being called off,” Kenanga said.
According to a CIMB Research report yesterday, though the petition is a negative development, it is not surprised as it feels that this is part of the reason why Mah Sing was able to acquire the land at a relatively cheap price of RM7 psf when the market value is much higher.
The land is strategically located between Pasir Gudang and Tanjung Langsat, the key components of the Eastern Gate flagship zone of Iskandar Malaysia.
Mah Sing plans to develop the land over eight to 10 years into a township with an estimated gross development value (GDV) of RM5 billion.
It is the group’s largest township to date and one of its key projects in Iskandar Malaysia that will boost its share of the remaining GDV and unbilled sales from the thriving corridor from 10% to 26%.
This article first appeared in The Edge Financial Daily, on November 14, 2013.
