1MDB completes sale of power assets to Chinese group
KUALA LUMPUR - 1Malaysia Development Bhd's (1MDB) sale of its power assets under Edra Global Energy Bhd to China General Nuclear Power Corporation and its subsidiaries for 9.83 billion ringgit (US$2.47 billion) cash has been completed.
1MDB said on Wednesday (March 23) the share sale and purchase agreement (SSPA) was successfully completed in the morning, with the exchange of shares, for cash.
“The SSPA completion marks the conclusion of the Edra monetisation, a significant and tangible milestone of the 1MDB rationalisation plan, as first announced by the Ministry of Finance on May 29, 2015,” it said.
1MDB congratulated the CGN Group in successfully completing the SSPA, and assuming ownership of a unique and attractive portfolio of energy assets.
On Nov 23, 2015, 1MDB, Edra and CGN Group had executed the agreement.
Under the SSPA, the CGN Group agreed to acquire 100 per cent of 1MDB’s ownership in all its energy assets (comprising Edra Solar Sdn Bhd, Edra Energy Sdn Bhd, Powertek Energy Sdn Bhd, Jimah Teknik Sdn Bhd, Jimah O&M Sdn Bhd, Mastika Lagenda Sdn Bhd and Tiara Tanah Sdn Bhd.
The CGN Group would also assume all the relevant gross debt and cash of the Edra operating companies.
Penang land
In another development, two more companies have joined the race to bid for 1MDB land in Air Itam, Penang. Sources said that Suiwah Corp Bhd, a supermarket chain operator, and Titijaya Land Bhd, a Klang Valley-based property developer, have put in their bids for the 94.7ha in Air Itam.
Earlier, two other parties had submitted their bids after 1MDB opened the sale of the land through a request-for-proposal exercise.
They were a joint-venture between the Ideal Property and BSG groups, and a company related to Goh Choon Lye, a well-known developer in the state.
It is learnt that Suiwah and Titijaya recently submitted their bids to 1MDB.
“What they submitted is more or less the same deal as proposed by the earlier two bidders, which values the development at over 180 ringgit (US$45) per sq ft (psf), which is higher than the price 1MDB had paid for it in 2013.
“The price of 180 ringgit psf is based on the development potential of the land over a period of time. When the land is fully developed, the price of the land will exceed slightly over 1.8 billion ringgit,” said a source familiar with the deal.
In 2013, it was reported that 1MDB had paid 1.06 billion ringgit for the property that came with encumbrances such as removing squatters, a process which was estimated to cost more than 250 million ringgit.
At 1.06 billion ringgit, 1MDB had paid around 104 ringgit psf for the Air Itam land.
The current valuation by CH Williams for the property without vacant possession is 130 ringgit psf or 1.325 billion ringgit.
It is understood that the companies tendering for the land deal have also included a profit-sharing package with 1MDB from their proposed mixed-development projects.
The companies would also need to fork out at least another 300 million ringgit to relocate the 3,000 squatters, which may not be sufficient.
Both Suiwah and Titijaya are strong contenders for the land deal, as both parties are involved in the property development business.
With their track record, both Suiwah and Titijaya will give Goh, who is another strong contender for the land deal due to his familiarity with the 94.7ha land, a good fight over the tender.
Suiwah is involved in the development of Sunshine Tower in Bandar Baru Air Itam (Farlim).
Sunshine Tower, with about two million sq ft of floor area, is a mixed-development project, scheduled for completion in 2019.
Titijaya, which has an impressive track record of development projects in Kuala Lumpur, will be undertaking that Areca@Penang project soon in Batu Maung, comprising four condominium blocks and four office towers.
It is learnt that the results of the tender will be released after mid-May this year.
It is learnt that the contenders were selected from a list that also included developers from Kuala Lumpur.
In 2013, the land was sold to 1MDB by Gerak Indah Sdn Bhd, AI Real Estate (formerly known as Farlim Properties Sdn Bhd), and Choong Lye Hock Estates Sdn Bhd, which controlled 85.7 per cent of the undivided interest in the total land area.
