AMBITIOUS plans to develop Malaysia’s largest property showcase and at the same time pare down the debt of 1Malaysia Development Bhd (1MDB) have come unstuck. 

Putrajaya today announced it was seeking fresh investors for Bandar Malaysia after the IWH-CREC Sdn Bhd consortium failed to pay RM7.42 billion for a 60% stake despite numerous extensions from December 2015.

The last extension expired on Sunday, April 30, said Putrajaya’s TRX City Sdn Bhd, which is the Ministry of Finance company that took over Bandar Malaysia from the debt-laden 1MDB.

The Malaysian Insight understands the termination now allows Putrajaya to seek other deals at current prices rather than 2015 prices, and go towards clearing 1MDB’s debts and protecting national interests through full ownership of the property.

“TRX City Sdn Bhd would like to announce that the Share Sale Agreement (SSA) entered into on December 31, 2015 with Iskandar Waterfront Holdings (IWH) and China Railway Engineering Cooperation (CREC) regarding the sale of 60% of the issued and paid-up capital of Bandar Malaysia Sdn Bhd has lapsed.

“While the agreement has undergone repeated extensions, IWH CREC could not meet the obligations outlined in the Conditions Precedent under the SSA during the stipulated deadlines. As a result, the share sale agreement between the parties stands null and void with immediate effect,” TRX City said in a statement today.

Putrajaya’s TRX City said its sole shareholder the Ministry of Finance will retain 100% ownership of the Bandar Malaysia site and will invite bids to be the new master developer.

“The selection process will involve very strict criteria, including track record, speed of delivery and financial capability for such large scale development. This is to enhance all aspects of Bandar Malaysia, including its role as a business, transport, residential and tourism hub.

“The steps taken today will ensure that there is no detrimental impact on the long-term development of Bandar Malaysia and that, upon its completion, the site will serve the national interest to an even greater extent than before,” it added.

According the statement, Bandar Malaysia will be a catalyst for economic growth and national development. The biggest development site in Malaysia in a key strategic position, it will offer many business, investment and employment opportunities, including Kuala Lumpur Internet City, the hub for the new Digital Free Trade Zone. 

It will also reiterated that Bandar Malaysia will be Malaysia’s transport nucleus, connecting the Kuala Lumpur-Singapore high-speed rail, MRT lines, KTM Komuter, Express Rail Link and 12 highways.

Iskandar Waterfront Holdings Bhd (IWH) and China Railway Engineering Corp Sdn Bhd signed the deal on December 31, 2015 with project owner 1Malaysia Development Bhd (1MDB) and was to complete it by June 2016 as the third and final rationalisation plan to settle 1MDB’s outstanding debt.

1MDB had embarked on three-legged rationalisation plan that began in June 2015, beginning with a share swap deal with Abu Dhabi-based International Petroleum Investment Company (IPIC) and the sale of its energy assets Edra Global Energy Bhd to a Chinese firm in November 2015.

The share swap with IPIC ran into issues but has been settled last week in a London-based arbitration process.

Both the deals in 2015 was to cut 1MDB’s debt by RM24 billion although critics said key national assets were being sold to foreigners when the Ministry of Finance-owned 1MDB was supposed to keep it in local hands.

In the Bandar Malaysia deal, the IWH-CREC consortium had valued the 197ha land parcel at RM12.35 billion. IWH-CREC is a 60:40 joint venture between IWH and CREC with the Johor government owning 40% of IWH through Kumpulan Prasarana Rakyat Johor Sdn Bhd. – May 3, 2017.