Penang Development Corp to fully refund Umech Land deposit

• In a filing with Bursa Malaysia on Tuesday, Sunway Bhd confirmed that its 70%-owned subsidiary Umech Land received a notice of termination of the JDA from PDC last Friday.

KUALA LUMPUR (Oct 24): Penang Development Corp (PDC) will be required to fully refund the deposit paid by Umech Land Sdn Bhd amounting to RM64.60 million following the termination of the joint development agreement (JDA) for the development of Batu Kawan Industrial Park 2 (BKIP2).

In a filing with Bursa Malaysia on Tuesday, Sunway Bhd confirmed that its 70%-owned subsidiary Umech Land received a notice of termination of the JDA from PDC last Friday.

"Pursuant to the notice of termination, the JDA shall be terminated on the expiry of 90 days from the date of the notice of termination," Sunway said, adding that PDC will fully refund the deposit within a period of 30 days from the date of termination of the JDA.

Last week, the board of directors of PDC terminated its controversial collaboration agreement with Umech Land for the development of BKIP2.

According to a statement posted 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”.

This was referring to the fact that Sunway had emerged as a majority shareholder of Umech Land only 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.

However, the board of PDC maintained that the selection process of Umech Land was transparent and in line with PDC policy. 

Sunway shares closed three sen higher at RM1.88 apiece on Tuesday, with a market capitalisation of RM9.41 billion.

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