China Railway says paid RM2.1 billion less for Bandar Malaysia stake
A Sino-Malaysian venture says it paid RM5.28 billion for the 60% stake in Bandar Malaysia, RM2.13 billion less than claimed by the debt-laden seller 1Malaysia Development Berhad (1MDB).
The China Railway Group Limited said its joint venture with Iskandar Waterfront Holdings Berhad (IWH) paid that amount in a filing with the Hong Kong Stock Exchange (HKEx) today.
1MDB announced last week on December 31 that the deal was priced at RM7.41 billion, and that the joint-venture had paid a 10% down payment.
A local unit of China Railway Group has a 40% stake in the joint venture that won the Bandar Malaysia stake.
The other partner is IWH, which is jointly owned by Credence Resources Sdn Bhd (60%) and the Johor government's Kumpulan Prasarana Rakyat Johor Sdn Bhd (40%).
The 1MDB statement last week stated the Sino-Malaysian joint-venture’s 60% “share of land” in the Bandar Malaysia development project but did not explicitly say the RM7.41 billion was the price of equity in the holding company.
China Railway Group’s HKEx disclosure stated that the RM5.28 billion price was for “60% of the equity interest in Bandar Malaysia Sdn Bhd”, the holding company for the development project. China Railway told HKEx that it will pay RM2.64 billion.
In its filing document which was sighted by The Malaysian Insider, China Railway said it would pay RM2.639 of the RM5.28 billion.
“This transaction has been examined and approved in the company’s seventeenth meeting of the third session of the board of directors on 31 December 2015.
“BMSB has the ownership of an important block to be developed in Kuala Lumpur, which has an area of approximately 2,000,000 square metres,” the document stated.
On December 31, 1MDB said the sale of the stake in Bandar Malaysia was part of the company’s plans to reduce its RM45 billion debt.
The stake was bought by a consortium comprising IWH and China Railway Engineering Corporation (M) Sdn Bhd, (CREC) the Malaysian subsidiary of China Railway Group.
The IWH-CREC Sdn Bhd consortium is a 60:40 joint venture between IWH and CREC.
The winning consortium together with the existing shareholders will resume the remainder of the commitments in Bandar Malaysia, which include the relocation of Pengkalan Udara Kuala Lumpur, a project that costs RM2.7 billion in its entirety, said 1MDB.
1MDB president and group executive director Arul Kanda Kandasamy said Bandar Malaysia was “ultimately a Malaysian project”, despite CREC’s stake in it.
“If you add the percentage, you will see that the eventual ownership is 76% Malaysian, 24% CREC.
“The ownership of Bandar Malaysia is also 54% federal and state government, and 46% private sector.
“So from all the angles looking at this, we believe it’s a win-win partnership.” – January 4, 2016.
Malaysian Insider
