KUCHING: Zecon Bhd’s wholly-owned subsidiary Zecon Land Sdn Bhd will purchase the mixed development project in Petra Jaya here from PRIMA Corporation Malaysia (PRIMA) and/or PRIMA Development Sdn Bhd (PDSB) (vendors) for RM63.56 million.
The purchase sum include the land cost.
According to Zecon, the vendors have agreed that the reimbursement of work done in relation to the project amounting to about RM7.64 million and land outstanding sum of RM2.3 million in relation to the sales agreement be deducted from the purchase sum and the balance amount payable (buy-back sum) is to be made by payment of about RM2.68 million upon the execution of the Mutual Termination Agreement (MTA) and followed by 18 monthly instalment of about RM2.83 million.
To recap, on April 1, 2015, Zecon Land and PRIMA had entered into a joint development agreement (JDA) for Zecon Land to design, develop and construct the mixed development project. And subsequently on Aug 15, 2016, Zecon Land and PDSB had via Heads of Agreement (HoA) to jointly undertake the project.
Prior to the execution of the JDA and HoA, Zecon subsidiary Zecon Petra Jaya Sdn Bhd had on Oct 31, 2013 entered into a sales and purchase agreement (SPA) and on April 1, 2014 entered into a Deed of Assignment (DOA) (the SPA and DOA are collectively referred to as the sales agreement) with PRIMA to dispose to PRIMA a portion of land measuring 54.157 acres in Petra Jaya for a total consideration of about RM46 million, of which 95 per cent of the sale consideration had been received.
The project involved the development and construction of residential buildings together with all the necessary amenities, utilities, common facilities and infrastructure on the 54.157 acre of land.
The project comprised the development of four blocks — three multi-storey apartment and one six-storey commercial block — with gross development cost of about RM1 billion.
In January 2023, Zecon Petra Jaya and Zecon Land agreed with PRIMA and PDSB to terminate the sales agreement, JDA, HoA and the project and entered into a MTA to terminate the SPA, DOA, JDA and HoA, and to provide for a full and final settlement of all the claims and disputes arising from these agreements. Under the MTA, Zecon Land will purchase the project, including land cost, from PRIMA and/or PDSB for RM63.56 million.
The parties to the MTA also agreed that the reimbursement of work done on the project and balance of sale consideration due and owing by PRIMA and/or PDSB to Zecon Land and Zecon Petra Jaya pursuant to the JDA and/or HoA totalling about RM9.94 million be set off against the purchase sum.
Zecon Land undertakes to pay PDSB the buy-back sum of about RM53.63 million by paying an initial sum of about RM2.68 million upon the execution of the MTA and thereafter by making 18 monthly instalment payments of about RM2.83 million each.
Subsequently thereto, Zecon had sought for a variation of the payment terms and PRIMA had vide its letter on March 22, 2024 counter proposed a revision to the payment terms of the MTA to the payment of about RM2.68 million to be made within one month of Zecon’s extraordinary general meeting (EGM) to be held for the purpose of approving the proposed acquisition, or by June 30, 2024 (whichever in earlier) and followed by 18 monthly instalments of about RM2.83 million from July 30, 2024 to Dec 30, 2025.
Zecon had on April 1, 2024 accepted the counter proposal.
“The board of directors of the company, having taken into consideration all aspects of the terms of the mutual termination, is of the opinion that this is in the best interest of the company and its subsidiaries. None of the directors or major shareholders of the company and persons connected with such directors or major shareholders have any interest in the Mutual Termination Agreement.
“Barring any unforeseen circumstances, the proposed acquisition is expected to be completed by 1st half of 2024.
“The proposed acquisition is not expected to have any immediate material effect on the earnings of the Zecon Group for financial year ending Dec 31 2023. Nevertheless, barring any unforeseen circumstances, the development of the project may contribute positively to the earnings and EPS (earnings per share) of the group in the future financial years as and when the construction has commenced,” said Zecon.
