PETALING JAYA, Jun 29 – Eco World Development Group Bhd’s subsidiary has purchased two parcels of land in Seberang Perai Selatan, Penang from Batu Kawan Development Sdn Bhd for RM875.24 million. Eco World estimates that a mixed township development on the sites will have a combined gross development value of RM7.76 billion.
The purchase includes a 300ha land area which was initially to be developed by Batu Kawan Development and Malton Group Bhd’s subsidiary Silver Setup Sdn Bhd under a joint development agreement (JDA). The other parcel measures 74.4ha. In a separate announcement Malton said its subsidiary was giving up its rights under the agreement in exchange for a revocation sum of RM50 million to be paid by Eco World subsidiary Eco Horizon Sdn Bhd.
The development has been awaiting approvals from the relevant authorities since October 2012. Malton in a filing with the stock exchange said the proposed revocation represents an opportunity for Silver Setup to exit the joint venture development in consideration for a one-off compensation sum of RM50 million for the loss of its development rights under the JDA.
It said, further, Silver Setup would be able to fully recover all advances made to Batu Kawan Development under the JDA, which could be rechannelled to Malton and its subsidiaries’ other on-going property development projects. Meanwhile, Eco World said it will fund the deposits for the two parcels of land and the revocation sum via internal funds.
The balance price for the two parcels will be funded through a combination of internal funds, bank borrowings and/or equity funding, while the balance revocation sum will be funded through a combination of internal funds and/or bank borrowings. It also proposes to raise equity funding at the project level through its partnership for growth business model, which was similarly proposed for other recent development projects.