Tussle over PJ Sentral resolved

By THE STAR
PETALING JAYA: Malaysian Resources Corp Bhd (MRCB) and Nusa Gapurna Development Sdn Bhd have reached an out-of-court settlement with Selangor State Development Corp (PKNS) over PJ Sentral, ending a year-long standoff on the RM3bil mixed development.
The agreement also paves the way for MRCB to buy out 100% of PJ Sentral from Nusa Gapurna and PKNS, although some of the original terms have been amended.
MRCB told the stock exchange in a filing yesterday that it had signed a settlement agreement with PKNS to resolve all disputes, conflicts, differences, claims and complaints against each other, as well as a share sale agreement to acquire PKNS’ 30% stake in PJ Sentral for RM85.3mil cash.
In addition, PJ Sentral will cede the development rights to PKNS to build Tower 2 on land owned by PJ Sentral at a price tag of RM91.12mil.
The development rights for Tower 2 will be handed over once the building is completed. Tower 2 has a net floor area of 80,130 sq m versus PJ Sentral’s 250,012 sq m.
MRCB had initially offered to pay for PKNS’ minority interest in PJ Sentral via a combination of cash, shares and free warrants, but it will now settle the amount fully in cash.
Set off against the RM91.12mil it will receive from PKNS for the development rights, MRCB stands to gain RM5.82mil in net proceeds, which it intends to set aside for working capital.
With all hurdles to the deal cleared, MRCB can go ahead to issue 108.81 million shares at RM1.55 apiece as payment for 70% of PJ Sentral to Nusa Gapurna, enlarging its share base to 1.76 billion shares.
Following the transactions, the company’s gearing is estimated to drop to 1.93 times from 2.1 times as of end-2013, although its debt pile remains unchanged at RM3.5bil.
MRCB said the acquisition of PJ Sentral would not have any material impact on its earnings for the financial year ending Dec 31, 2014, as the deal is only expected to close in the third quarter of this year.
An EGM will be called to obtain shareholders’ approval for the amended terms.
The tussle for PJ Sentral first broke out into the open after PKNS, apparently under the instruction of the office of Selangor Menteri Besar Tan Sri Khalid Ibrahim, sent a letter to Nusa Gapurna disagreeing to the sale of PJ Sentral to MRCB.
PKNS later put in a competing offer for 70% of PJ Sentral worth RM220mil, some 11% higher than MRCB’s RM199mil offer, but this was rebuffed by Nusa Gapurna.
PJ Sentral is widely seen as MRCB’s next flagship development as its transport hub KL Sentral is nearing completion.
MRCB closed up one sen to RM1.63.