HK firms in $800m Malaysian project
TEM Fat Hing Fung has teamed up with Cheung Kong and New World Development in an $800 million office, hotel and retail project in Johor Bahru, Malaysia.
An 83,000 sq ft site, owned by Tem Fat, will be turned into a comprehensive building featuring office, hotel and retail space, with car parking facilities.
Gross floor is estimated at 659,640 sq ft, of which 250,640 sq ft will be office space, 199,000 sq ft retail space and the remaining 210,000 sq ft a hotel.
Tem Fat chairman Raymond Chan Fat-chu yesterday said the project was another push by the firm to diversify into businesses other than its core operations - refining, moulding and trading of gold bullion and jewellery.
Equity among the three partners in the venture was distributed according to their respective shares in the property, he said.
The hotel will be developed and shared two-third by Tem Fat and one-third by New World, while the three partners will have equal interests in development of the car park, office and retail areas.
Total construction cost of $800 million will be funded by the three partners through their shareholdings.
Mr Chan said Tem Fat would meet its shareholding through internal resources and from bank borrowings jointly with its two partners.
Prior to the development agreement, the companies had entered into two subscription agreements under which Cheung Kong and New World will pay a combined $60.7 million for 28.6 per cent and 33.3 per cent interests, respectively, in Yetcome.
Yetcome's only asset is its 100 per cent interest in T & T Properties, which in turn wholly owns the development site. T & T was acquired by Tem Fat two years ago.
Cheung Kong and New World have also agreed to take on $22.4 million and $33.6 million, respectively, of the total debt of $100.85 million originally owed by Yetcome to Tem Fat.
Cheung Kong and New World also have agreed to take on $12.3 million and $18.5 million, respectively, of the total debt of $55.4 million originally owed by Skytrain to Tem Fat.
Skytrain's only activity has been to incur expenditure on the formation of re-development concept plans for the development project owned by T & T.
The 28.6 per cent interest in Yetcome will entitle Cheung Kong to two-ninths of the total value of the entire project.
Following the selling of interest in Yetcome and Skytrain, worth a net $109 million, Tem Fat says it is expected to make a profit before tax of some $21.5 million.
''We chose Cheung Kong and New World as our partners as they are experienced property developers,'' Mr Chan said, adding that he was looking forward to co-operation in the future.
But he dismissed suggestions that the company was considering offering its shares to the property giants, which have been taking strategic stakes in listed companies.
Tem Fat viewed the property project as a landmark in its diversification into property.
although the latest programme was not its first property project.
Following a self-developed property project in Penang, Malaysia, which has just been topped out, the company has entered a project in Shanghai.
