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- It is important to note that Sunway had only emerged as a majority shareholder in Umech Land two days prior to the announcement of the agreement, by injecting RM23.33 million into the company, thus diluting the shareholding of the original shareholders Karen Cheng Pui Kwan to 21% and Nathaniel Rajakumar to 9%.
KUALA LUMPUR (Oct 17): The Penang Development Corp (PDC) has decided to terminate its controversial collaboration agreement with Umech Land Sdn Bhd for the development of Batu Kawan Industrial Park 2 (BKIP2).
In a statement on Penang Chief Minister Chow Kon Yeow’s Facebook page, the board of directors of PDC said the change in majority shareholders of Umech Land’s equity structure which was done without informing PDC and without PDC’s approval “is a serious issue and cannot be accepted by the board of PDC”.
However, the board of PDC maintained that the selection process of Umech Land was transparent and in line with PDC policy.
"The board of PDC is also aware that this collaboration is reasonable and has a positive impact on PDC's cash flow including from a commercial aspect, and benefit to the development of the state of Penang," it added.
The termination of the agreement comes with a three months’ notice, PDC said. Upon the contract’s termination, PDC is instructed to advertise for a request for proposal to collaborate with PDC to develop BKIP2, the statement added.
The deal for the development of the mega industrial project, with an estimated gross development value of at least RM3.5 billion over eight years, came under scrutiny after Sunway Bhd on Sept 27 announced that its 70%-owned unit Umech Land had inked a joint development agreement with PDC to co-develop a 558.96-acre parcel in Byram, Seberang Perai Selatan, near Batu Kawan.
It is important to note that Sunway had only emerged as a majority shareholder in Umech Land two days prior to the announcement of the agreement, by injecting RM23.33 million into the company, thus diluting the shareholding of the original shareholders Karen Cheng Pui Kwan to 21% and Nathaniel Rajakumar to 9%.
Before Sunway's cash injection, Umech Land was 70:30 owned by Cheng and Nathaniel.
A report by The Edge had previously quoted Chow as saying that he was not aware Sunway was involved until it announced the deal to Bursa Malaysia.
Concerns over the perceived lack of transparency and governance by the state government and PDC over the agreement had been raised by various quarters, including former Penang deputy chief minister II Professor Dr P Ramasamy Palanisamy, who had called on PDC to cancel the deal.
In response to the announced termination on Tuesday, Ramasamy said that while he welcomes the termination of the land deal, the board of PDC's defence of the land deal with Umech Land "is not acceptable".
"I am not sure whether Umech Land had the financial strength to undertake the purchase and development of the industrial land.
"If Umech Land had the expertise and financial capacity, why bring in Sunway in the first place?
"I think it was wrong for PDC to focus primarily on the unannounced change in the ownership without linking to the deal between PDC and Umech Land," Ramasamy wrote on his Facebook page.
Read also:
Aspen clarifies decade-old land buy from PDC ‘fundamentally different’ from Umech's BKIP2 deal
Penang CM says Lee Kah Choon replaced as PDC director a day prior to Umech Land exchange deal
Suspend BKIP2 land sale to Sunway-Umech indefinitely — P Ramasamy
PDC to address questions on BKIP2 land sale next week, says Penang CM
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