A SINO-MALAYSIAN consortium is seeking legal opinion after its 60% stake in Bandar Malaysia was rescinded by Putrajaya today because it had failed to pay in time.

The Ministry of Finance’s (MoF) TRX City Sdn Bhd (TRXCSB) dropped a major bombshell this evening when it terminated the RM7.42 billion agreement with IWH CREC Sdn Bhd, announcing the deal lapsed after several extensions since the December 2015 sale.

IWH CREC (ICSB) confirmed getting TRXCSB’s notice of termination over the share sale agreement inked on December 31, 2015 to sell 60% stake to the consortium. 

“ICSB is concerned with the content of the Termination Notice and the subsequent press release issued by TRXCSB, which, given the factual matrix, does not fully and accurately reflect the circumstances and conduct of the parties in this matter. 

“ICSB takes this matter very seriously and is at present reviewing the content of the Termination Notice and press release, with its advisors and legal counsel. A further announcement on this matter will be made in due course,” the consortium said in a statement.

Putrajaya earlier announced it was seeking fresh investors for Bandar Malaysia after ICSB failed to pay for a 60% stake despite numerous extensions.

The last extension expired on Sunday, April 30, said TRXCSB which took over Bandar Malaysia from debt-laden 1Malaysia Development Bhd (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,” TRXCSB said in a statement today.

TRXCSB said its sole shareholder, the MoF would 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.

The statement said Bandar Malaysia would 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 reiterated that Bandar Malaysia would 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 1MDB and were to complete it by June 2016 as the third
and final rationalisation plan to settle 1MDB’s outstanding debt.

1MDB had embarked on a 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 MoF-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 state government owning 40% of IWH through Kumpulan Prasarana Rakyat Johor Sdn. Bhd. – May 3, 2017.