Highlight Mah Sing aborts RM359.56m Seremban land buy

by **Cals** Fri 14 Aug 2015, 18:51

Highlight
Mah Sing aborts RM359.56m Seremban land buy

KUALA LUMPUR (Aug 14): Mah Sing Group Bhd (Mah Sing) ([You must be registered and logged in to see this image.] Financial Dashboard) has aborted the purchase of a prime freehold tract in Seremban measuring 1,051.3 acres for RM359.56 million, due to a breach of terms in the sale and purchase agreement (SPA) by the vendors.
Its wholly-owned unit Grand Prestige Development Sdn Bhd, who was to undertake the acquisition, sent a letter through its solicitors today to the vendors informing them that the SPA is void and/or rescinded.
“The SPA is void and/or rescinded, due to, amongst others, misrepresentation and/or the breach of terms and conditions of the SPA by the vendors and/or events that are unlawful have occurred,” said Mah Sing in its filing on Bursa Malaysia today.
Mah Sing has also demanded a refund of the 10% deposit, RM35.96 million, together with interests earned thereon, from the vendors.
“The board is of the opinion that the rescission of the proposed acquisition is in the best interests of Mah Sing and its shareholders,” it said.
The announcement today came after the group revealed last Wednesday (Aug 5) that seven individuals had initiated a legal suit against Grand Prestige over the proposed acquisition.
The plaintiffs, the alleged undivided registered proprietors/beneficial owners of the land, had sought for, amongst others, a declaration that the SPA entered into between Grand Prestige and the vendors on Aug 11, 2014, was invalid.
The vendors, on the other hand, are the surviving trustees appointed by all the registered and beneficial owners of the land to be their sole and absolute trustees in respect of the land, according to Mah Sing’s previous filing.
Meanwhile, in its filing today, Mah Sing said it had raised RM629,323,152 from a rights issue with warrants that was completed on Feb 26 this year, of which RM107.2 million was earmarked for part payment of the proposed land acquisition.
“With the rescission of the proposed acquisition, the amount has been proposed to be re-allocated for other potential land acquisitions and/or property development activities such as accelerating the development of Mah Sing’s selected existing projects, should the opportunity arise,” it said.
Mah Sing also said it will still seek the approval of its shareholders at an extraordinary general meeting to be convened to discuss the variation in the utilisation of the proceeds raised.
Mah Sing had previously announced that the proposed acquisition would site a mixed development with an estimated gross development value (GDV) of RM7.5 billion, its maiden foray into Negri Sembilan.
“As the development would be developed over a period of seven–eight years, with revenue contribution estimated to commence only in 2016, the rescission of the proposed acquisition is not expected to have a material effect on the earnings of Mah Sing in the near term,” said Mah Sing today.
It added that any medium to long-term impact would be mitigated through the development of its existing land banks and/or new lands acquired in the future.
As at 3.51pm, Mah Sing (fundamental: 2.8; valuation: 2.4) was trading at RM1.49, for a market capitalisation of RM3.614 billion.
[size=12](Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)[/size]