MRCB-Gapurna deal firms up

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KUALA LUMPUR: After months of negotiations, the Gapurna group has firmed up its entry into Malaysian Resources Corp Bhd (MRCB) in a deal expected to be announced today.

Sources say the mechanics of the deal negotiated between both sides since the middle of last year is very much intact. Nusa Gapurna Sdn Bhd, which has 60 acres of prime land worth RM1 billion, will be injected into MRCB in return for shares.

The Gapura group will end up with 20% of the enlarged MRCB while the Employees Provident Fund (EPF) will continue to hold about 40% in the construction outfit cum property

developer.

This is by virtue of the EPF’s 40% interest in Nusa Gapurna.

“The dilution is minimal for EPF because of its sizeable interest in Nusa Gapurna,” says a banker familiar with the deal.

The rest of the shares in Nusa Gapurna are held by the Gapurna group headed by the family of businessman Datuk Mohamed Salim Fateh Din.

Gapurna has had a working relationship with MRCB that started in 2009 when the two companies jointly developed a piece of land in Kuala Lumpur Sentral for Shell.

Of the 60 acres under Nusa Gapurna, some 40 acres are located in Petaling Jaya and is being developed as PJ Sentral Garden City with an estimated gross development value close to RM3 billion.

Nusa Gapurna also has 17 acres in Taman Seputeh, an upper middle-class suburb located a stone’s throw away from KL Sentral, and 3.5 acres next to Subang Parade in the densely populated Subang Jaya neighbourhood.

MRCB has been without a CEO since July 2012 after the resignation of Datuk Mohamed Razeek Hussain who has gone on to head the property division of DRB-Hicom Bhd.

It has been previously rumoured that the 52-year Salim or his son would head MRCB’s operations. However, this has been denied by officials aligned to the Gapurna group. MRCB, meanwhile, has fallen from a high of almost RM2.20 a year ago to close at RM1.24 yesterday. Its market capitalisation is down to RM1.38 billion.

Considering the depressed prices of MRCB, if the shares are issued at the current market price in exchange for the RM1 billion worth of assets under Nusa Gapurna, the Gapurna group could end up with close to 25% in MRCB.

But sources say the new shares are likely to be fixed at a premium to market price.

This article first appeared in The Edge Financial Daily, on February 8, 2013.

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