PKNS: Intrigues of street-ruled government (Part 9)
The MH370 tragedy had been too disturbing that we had lost the will to up-date with new posting. Alas life has to continue and the series will continue too albeit a slightly varied format. It is to get traffic.
To continue where we left off, it should be to start to with the problems with Datok Othman Omar. However, there was a corporate development last Thursday and Friday that should be highlighted because we are aware of an inside story that was tipped off to us.
Indirectly, that could be the one of the unknown reason for poor Chinese turnout at the Kajang by-election.
It serve the purpose for an old friend in PKR to ponder why would the Chinese not bury BN in Kajang with the UMNO Hulu Langat machinery is in such a disarray with an indifferent and crooked leadership at the UMNO divisional and state level?
Kajang move had a lot to do with Tan Sri Khalid Ibrahim's handling of PKNS and water settlement that resulted in plans to remove him including the possibility of an impeachment using SELCAT.
Khalid appeared in the SELCAT hearing last Tuesday and Wednesday but most of the PKR members, especially Nik Nazmi was focused on nailing Khalid on Azmin Ali's removal issue than problems within PKNS.
Based on the words of Azmin Ali and Datuk Othman Omar, they probably got Khalid by the balls on that one. However, the members of SELCAT were not serious on the problems within PKNS. They did not do thorough homework or not interested to go beyond Azmin's removal.
As far as the PKNS Holding, the Managers were sickeningly out of focus, not thinking and clouded by ego and emotion, especially that Dr Aiman. No wonder they are questions on his background and whether he actually has a Phd.
More on that in another posting.
Now the talked about corporate development.
It relates to Tan Sri Vincent Tan's younger brother, Tan Sri Danny Tan who seemed to be more in the limelight than Vincent and close with the Pakatan Rakyat state governments.
Asiaone reported the Tropicana founder and executive vice-chairman is a notable newcomer at 16th in the burgeoning billionaire club of Malaysia. Read the article in Malaysia Chronicle here.
It also relates to Khalid's other favourite corporate group to I Berhad, whih is Eco World. Notice that one can see Eco World development projects everywhere in Selangor.
First, The Star's Saturday report commentary:
Published: Saturday March 29, 2014 MYT 12:00:00 AMKhalid had requested Tropicana to pay up in full on Thursday March 27th. Read in Malaysia Reserve here or FMT here.
Updated: Saturday March 29, 2014 MYT 6:47:49 AM
Khalid caught off guard
Selangor Mentri Besar Tan Sri Khalid Ibrahim has always prided himself on being one up on the state’s previous administrators because of his background as an investment banker.
He has time and again said that his experience in the corporate world has been useful in dealing with developers wanting a piece of the action in the abundant land held by the state.
However, a deal that the state had entered into with Tropicana Corp Bhd in April last year has caught the mentri besar flat-footed.
Under the transaction, Tropicana acquired 1,172 acres from the state for RM1.3bil to be paid over 20 years as the land is being developed.
Under the terms of payment, Tropicana had to fork out RM50mil as deposit and make two advance payments over a period of six months. The remaining is to be paid with interest over various schedules stretching over 18 years.
However, what Tropicana has done is carve out a portion of the land to Eco World Development Group Bhd for a cash payment of RM470.57mil.
This has got the state all riled up because Tropicana has been able to monetise the deal faster that it had envisaged. Now Khalid is seeking an accelerated payment schedule for the land.
He wants RM844.2mil, which in the state’s opinion is the present value of the land.
But whether he gets it or not is something for Tropicana to decide. This is because the agreement does not restrict Tropicana from disposing a portion of the land to reduce the cost of holding it.
Khalid has played his cards well in the consolidation of the water assets in the state so far. He has also got the state better deals in many of the land transactions.
But he appears to be side-footed in this particular transaction.
His excuse is Danny Tan had realised the full value of the deal so he has contravened an agreement made thus pay up now. However Danny Tan view is that an opportunity arise for them to realise so it is not for the state to dictate.
Whether Khalid missed on that or something else is happening.
In summary, Khalid sold a 1,172 land for RM1.3 billion to be paid over 20 years but now asked for cash term at RM844.2 million It looks like a loss but there is the interest factor. And Khalid will use this for his political answer.
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| Easy money, said Tan Sri Danny Tan |
The disturbing part to Khalid is that Danny sold part of the land to Eco World for RM470 million cash and his cashflow in the whole deal is fine and solid to development the rest of the land. It is easy money for Danny Tan and Khalid looked like a fool.
The balance is easy for Danny to settle with the money from Eco World could be used to develop the land and pay the installments. The detail of the deal was reported in The Star below:
Published: Friday March 28, 2014 MYT 12:00:00 AMThis deal made Khalid look stupid like selling buloh kasap where state sell land but buyer that made money.
Updated: Friday March 28, 2014 MYT 7:05:54 AM
Tropicana has right to decide on accelerated payment for Sgor land
By Wong Wei-Shen
PETALING JAYA: The agreement between the Selangor state government and Tropicana Corp Bhd allows for the latter to accelerate the payment for a piece of land in Canal City that the developer acquired from the state in April last year.
However, whether Tropicana accedes to the request by the state government to hasten the payment for the land will depend entirely on the developer.
“The schedule of payment is already stated in the agreement. There is nothing that allows for a change in the schedule unless the developer agrees,” said an executive familiar with the deal.
In April last year, Menteri Besar Selangor Inc (MBI) and Permodalan Negeri Selangor Bhd (PNSB) entered into an agreement to dispose 474ha of land in Canal City to Tropicana’s Sapphire Index Sdn Bhd for almost RM1.3bil.
Under the terms of agreement, Tropicana was required to pay RM50mil within the first six months from the date of agreement.
Subsequently, a sum of RM537mil will be paid, together with interest, in 12 yearly instalments.
The remainder RM458.26mil comprises a 5% entitlement of the gross development value of the lands, coupled with 3% of the net profit from the project.
However on Wednesday, Selangor Mentri Besar Tan Sri Khalid Ibrahim said that the state would seek faster payment terms from Tropicana.
This comes after Tropicana entered into a sale and purchase agreement (SPA) to sell 128ha of the 474ha land it bought from the government to Eco World Development Group Bhd for RM470.67mil cash, or about RM34 per sq ft last week.
The deal is targeted for completion by the second half of 2014 and is expected to generate a net gain of about RM170mil for Tropicana.
Based on announcement in Bursa Malaysia on April 15, 2013, there is a clause for accelerated payment at the discretion of Sapphire Index to accelerate payment.
“PNSB hereby agrees that the developer-cum-purchaser is entitled at any time at its absolute discretion to accelerate payment of the purchase price by the payment of any or all of the instalments prior to the expiry of the completion period, being the 12th years from the first instalment payment date,” the announcement stated.
A lawyer said a contractual agreement had to be fully respected and followed through, regardless of events that take place after the agreement.
“It cannot be changed just because Tropicana got an opportunity to sell a segment of the land at a higher price.”
The lawyer added that a supplementary agreement could be drawn up if the parties mutually agreed to change the terms.
Khalid reasoned that the government could channel the proceeds from the early payment to various other property development and social programmes for the benefit of the people of Selangor.
Tropicana declined to comment on the matter when contacted.
Khalid had said the transaction gave the government a “new perspective” into its agreement with Tropicana.
“Since Tropicana had realised the land’s full potential from the sales, the state, too, will do the same,” he said on Wednesday.
On the other hand, this deal had raised eyebrow within the Chinese business community. It raised considerable distrust among the Chinese on Khalid's honesty and clean image.
The word have spread around within the Chinese community and is partly the reason behind Kajang's poor turnout of the Chinese. Thus, it is not just the Chin Beng festival or protest for abusing democrasy or FRU at Sungai Chua that pissed the Chinese off.
This deal have led to a growing impression among the Chinese media and those in the know in Selangor that PKR is no better than the UMNO they accused as corrupt and is wrecking the country. In a matter of time, they will realise that street demonstrators or public agitators like any revolutioners never make good government.
There is more to the story.
One Chinese corporate businessman informed us that even at RM1.3 billion the land is grossly undervalued. It should be RM1.7 billion and words are Khalid had pocketed RM200 million from the deal.
No wonder he can settle his RM67 million loan with Bank Islam Berhad, paid for PKR's Tropicana rentals due, finance Kajang by-election and many more.
It is laughable to read Khalid was reported by The Sundaily here to have said, "They can trust me!"
On Khalid's new favourite corporate group, Eco World, read extract below from The Star dated March 29th, below:
While Eco World’s share price has appreciated 238.57% to RM4.74 since former SP Setia top brass first made a takeover offer last October, Maica’s share price has risen some 80% since a mandatory takeover offer by Ter was made in January this year.Continuing further
Eco World took over the listing status of Focal Aims Bhd, while Sunsuria Development Sdn Bhd’s property business is being injected into Maica. An application to change Maica’s name to Sunsuria Bhd has been approved.
Going forward, fund managers reckon that Eco World will need to raise funds as it injects more land from its private entity into the listed entity.
“With Liew in the foreground, do not expect Eco to be a mid-league property company. If anything, Eco World will likely be one of the big boys in the not so long term,” remarks one fund manager.
Eco World
Eco World, which is made up of former S P Setia top brass, has the invisible imprint of the latter’s founder and former boss Liew all over the company.
Can we expect anything less than the S P Setia sort of growth, delivery and quality with Liew’s standards imprinted within the Eco group?
In less than four months since the takeover of Focal Aims was completed, Eco World’s market capitalisation has already tripled to RM1.2bil.
As it is, the listed entity only owns one asset, which is 128ha in Canal City, Selangor which it purchased from Tropicana Corp Bhd for RM470.67mil.
The other projects in Eco World, for instance its EcoBotanic and EcoSpring in Iskandar Malaysia, are currently under its private arm, Eco World Development Sdn Bhd.
Eco World, the private arm, has seven development projects in the country’s three property hotspots – the Klang Valley, Penang and Iskandar Malaysia, Johor.
It has 1,14.06ha of undeveloped land in the country, out of which some 1,000 acres are located in the Klang Valley, 404.69ha in Penang and the rest in Iskandar Malaysia.
Analysts estimate that the projects that are under the private arm, have a gross development value of some RM30bil.
Eco World Development Sdn Bhd is 50% owned by Eco World Development Holdings Sdn Bhd (formerly known as Maple Quay Sdn Bhd), which in turn owns 30.01% of Eco World Development Group Bhd.
Both the listed and unlisted entities of Eco World are now helmed by former S P Setia Bhd executive director Datuk Chang Khim Wah.
The listing of Eco World came about when Liew’s eldest son, Tian Xiong and Eco World Development Holdings Sdn Bhd made an unconditional takeover offer of Focal Aims for a cash offer price of RM1.40 per share last October. The takeover offer closed on Nov 12 with the offerors owning 65% of the company.
Tian Xiong is a major shareholder and executive director in Eco World.
Just like I Berhad, a common trait in Khalid's underhand dealings is he deals with as few people and those with a history with him.
Didn't PNB became a shareholder of SP Setia and eventually tookoever SP Setia in a strange arrangement where management remains?
As mentioned in the last related posting on Khalid's probable impeachement here, there are still "The Selangor Polo project, more crap happening in De Palma Hotel, the leaving for Singapore former CEO cum General Manager, Dato Othman Omar, lawsuit lost to MRCB and Nusa Gapurna, crazy mak tiri Datin Paduka Azlina Zakaria, and many more" to expose.
However, keep an eye for Kwasa Land development of the old RRRI in which PKNS and Tropicana have been short listed while Eco World did not manage to pre-qualify. Read The Star dated March 4th here.
Khalid wants to be around for this. So does Anwar, Azmin and PKR.