Magna Prima Bhd/Ho Hup ... Mar 09

Magna Prima Bhd (MPB), a medium-sized property developer, has landed the much-sought-after prime land in the Golden Triangle where the Lai Meng primary school and kindergarten are located, for RM148 million cash.

The deal will see MPB carving out a piece of land in Bukit Jalil, which the company had proposed to acquire from Ho Hup Construction Company Bhd two weeks ago, for the school and kindergarten to relocate.

The land is just a stone’s throw from some of the city’s prime landmarks such as the Petronas Twin Towers, Suria KLCC, Ritz-Carlton Residences Kuala Lumpur, Menara TA, Menara Public Bank, Wisma Selangor Dredging, Zouk, Avenue K and Menara AmBank. Also in the vicinity are a number of international hotels such as the Renaissance, Concorde, Shangri-La, Corus, Crown Regency, Equatorial, Nikko and Mandarin Oriental.

The purchase price was at a discount of 23.6% or RM45.85 million from the market value of RM194 million that was determined by independent valuers.

In return, TSB would transfer a piece of freehold land in Bukit Jalil measuring 239,818 sq ft to the association for the purpose of relocating the Lai Meng primary school and Lai Meng kindergarten.

MPB proposed to acquire the land from Bukit Jalil Development, a 70% subsidiary of Ho Hup Construction, for RM19.41 million. However, the land is charged to the bank, meaning it has some borrowings tied to it and Ho Hup had done some work on it amounting to RM11.82 million.

MPB and Ho Hup have a common director and the transaction went through an independent adviser and has been approved by shareholders.

Another wholly owned subsidiary of MPB, Magna City Development Bhd, reached an agreement with Muafakat Baru Sdn Bhd whereby the former is granted a three-month extension until June 19 to acquire two parcels of land measuring a total of 10.23 acres for RM57.93 million cash from the latter.

Datuk Lye Ek Seang has a 3.69% stake in Magna Prima. Extreme System has 27.95% stake in Ho Hup. Datuk Lye’s wife Datin Viannie is a substantial shareholder in Extreme System.

Going Forward …

At a purchase price of rm148 million, the Jln Ampang land is valued at Rm1300 psf. A land valuer said the land where Wisma Angkasa Raya sits on was sold to Sunrise Bhd at a record price of about 2600 psf.

On the new prime site in Jln Ampang, Magna Prima plans to undertake a mixed development project, with total gross development project, with total gross floor area about 1.2 million sq ft and an estimated gross development value of Rm1.3 billion. The project is expected to commence in 2012 and scheduled for completion in 2015.

By the time it starts developing the land, Malaysia’s economy should have recovered and this would help boost its bottom line.

The company currently has only one ongoing project in KLCC vicinity, which is a luxury condominium project named Avare.

However, it should be noted that the proposed acquisition is still subject to various regulatory approvals, including consent from the education authorities for the relocation of Lai Meng school land kindergarten.

Getting this approval seems to be the least of the problems as it is well known that schools located in the city have been encouraged to be relocated.

While Mega Prima stands to benefit from the land deal, Ho Hup, on the other hand, is beset with financial problems and is awaiting a revamp. Just March 2009 alone, the company was served two winding petitions by its creditors.

Ho Hup is due to submit its regulatory plan by March 13, 2009, the company seek an extension of six months to Sept 30, 2009 for it to submit its revamp plan to the authorities.

Ho Hup has been in the red since Fy2006. For Fy2008, its net loss widened to Rm56.65 million from Rm46 million in FY2007. Its Fy2006 net loss stood at RM35.1 million.

Looking at the company (Ho Hup) is faring so far, it needs to quickly to come up with the revamp plan to save Ho Hup. As of now, not many really know what plans Ho Hup’s management has in mind to revive the ailing company.

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