TRX City Sdn Bhd has signed the share sale agreement and shareholders agreement with IWH-CREC Sdn Bhd that will kick off the Bandar Malaysia development on the 486-acre plot located at the site of the Royal Malaysian Air Force base on Jalan Sungai Besi.
TRX City is wholly owned by the Minister of Finance Inc, while IWH-CREC is a consortium comprising Iskandar Waterfront Holdings Sdn BHd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC).
In a joint statement today, the parties announced that IWH-CREC is acquiring a 60% stake in Bandar Malaysia Sdn Bhd, the project's master developer, from its parent company TRX City.
The consideration for the stake sale was RM7.41 billion, according to past reports, which the parties said today "was anchored on Bandar Malaysia's land valued at RM12.35 billion". The project's expected gross development value is about RM140 billion.
In the revived deal, the original staggered payment term has been shortened from seven years to three years.
In addition to the original deposit sum of RM741 million, IWH-CREC will pay an additional RM500 million as advance payment, bringing the total advance to RM1.24 billion.
Finance Minister Lim Guan Eng said the revival of Bandar Malaysia is an integral part of fostering long-term bilateral relations between Malaysia and China.
"Under the new deal, Bandar Malaysia will be more rakyat-centric, as opposed to previously under 1MDB, when the deal was driven by 1MDB Rationalisation Plan aimed at paying off 1MDB's debt.
"We managed to double the number of affordable homes to 10,000 units. We will also create the 85-acre People's Park, which will be a combination of a single contiguous built park and several satellite parks," he said.
Lim also said the project would see greater Bumiputera participation and give priority to the use of Malaysian produced construction materials, technology and talent.
The statement today confirms a report by theedgemarkets.com last Saturday (Dec 14), which reported that apart from the addition of more affordable homes and a massive park, IWH-CREC will pay RM1.24 billion as advance payment. The report also said IWC-CREC will obtain a bank guarantee of the availability of sufficient funds for the settlement of the purchase consideration.
On completion of the stake sale, IWH-CREC will own a 60% stake in the Bandar Malaysia project while the Ministry of Finance will hold the remaining 40%.
With IWH-CREC being a 60:40 joint venture between IWH and China's state-owned enterprise CREC, CREC will have an effective stake of 24% in the project.
Businessman Tan Sri Lim Kang Hoo controls a 63% stake in IWH, while Johor state government's Kumpulan Prasarana Rakyat Johor Sdn Bhd holds the remaining 37%.