KUALA LUMPUR: Kuala Lumpur City Hall (DBKL) has chosen a new company over Ivory Properties Group Bhd to revive the Plaza Rakyat project because the city hall was offered a more attractive deal for the abandoned project.
However, DBKL did not undertake an exercise to invite other interested parties to submit their bids for the project before issuing the letter of intent to Profit Consortium Sdn Bhd, the company that plans to build a “Sungai Wang Plaza” kind of mall on the site that is located near the Pudu Raya bus terminal.
“The site is ideal for a Sungai Wang kind of development,” said an official close to DBKL.
According to the official, apart from Profit Consortium, there was another party that expressed interest in reviving the Plaza Rakyat project.
“But Profit Consortium gave far better terms than what was offered by Ivory Properties or the other company. Among others, the returns to DBKL was not pegged to sales of the project. Also Profit Consortium did not seek a revision in plot ratio of Plaza Rakyat,” said the official.
“DBKL would get a guaranteed portion of the sales. The new consortium wants to replicate the Sungai Wang Plaza in Plaza Rakyat,” said the official.
It is believed that the new proposal allowed DBKL to save more than RM100mil, which was another reason why it chose Profit Consortium.
“DBKL does not have to pay the old developer – Plaza Rakyat Sdn Bhd (PRSB) – a sum of RM200mil to take possession of the site. Discussions are ongoing to reduce the amount to less than RM100mil,” said the official.
Profit Consortium is owned by Maxcorp Development Sdn Bhd, SW Land Sdn Bhd and Tan Sri Abdul Samad Alias. Maxcorp is the private vehicle of Major (Rtd) Anuar Adam while SW Land is the developer of Sungai Wang Plaza.
Plaza Rakyat has been abandoned since the 1998 financial crisis and PRSB was finally put under receiver and manager AdamPrimus Chartered Accountants a year ago.
AdamPrimus called for a tender exercise in May 2013, in which Ivory Properties was chosen. Under the terms, Ivory Properties had to pay PRSB RM400mil for the work done on Plaza Rakyat then and pay DBKL a maximum RM560mil from the development.
A crucial condition set by AdamPrimus was that Ivory Properties obtained the consent of DBKL to take over the project.
However, this was a sticking point because DBKL had filed for legal action to terminate its agreement with PRSB on the grounds that the latter did not fulfil its conditions.
Consequently, DBKL did not recognise AdamPrimus taking over the revival of the project and the tender exercise where Ivory Properties came with the best offer.
DBKL filed for arbitration and subsequently won an award in its favour in early July to terminate the agreement with PRSB and take back the site.
However, the condition is that DBKL pays PRSB RM100mil for work done on the site and settle outstanding bank loans with interest.
“DBKL is negotiating with the receivers and manager to reduce the amount to RM70mil after netting off the amount due for quit rent and other fees,” said the official. “City hall has filed the arbitration awards at the Kuala Lumpur High Court to make them enforceable as a court order. Once the award is registered only then can we take possession of the site.”
However, Ivory Properties is still keen on reviving the abandoned Plaza Rakyat mixed development project and is hopeful of getting some feedback from DBKL on the matter.
Ivory Properties chief executive officer Datuk Low Eng Hock said that although the acquisition and rehabilitation agreement (ARA) had been terminated, the group was still waiting for DBKL to get back to them.
“We are still keen on reviving the abandoned project and have laid our conditions to DBKL.
“We are still waiting for DBKL to get back to us and we hope to receive a favourable response from DBKL soon,” he added.
Low said the company believed that DBKL would find an amicable solution that benefited all parties, especially the buyers who had been affected all these years.
In an announcement to Bursa Malaysia on Sept 6, Ivory Properties announced that the ARA had been terminated between its subsidiary Ivory Place Sdn Bhd and PRSB as both parties could not come to an agreement.
~ By THE STAR
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