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Monday, April 8, 2013

'Boustead deal purely commercial, not a bailout'


The acquisition by Boustead Holdings Bhd of 200 acres of land owned by Awan Megah Sdn Bhd has been described as a purely commercial deal, not a political bailout as widely thought.

NONEBoustead deputy chairperson and managing director Lodin Wok Kamaruddin (left) said he thought the purchase would be a good idea as the company owned 700 acres of land adjacent to the 200-acre property in Bukit Raja.

"We received a proposal to purchase it in the middle of last year. It is beneficial in terms of economies of scale, as we own land next to it (that has been) privatised to Boustead, Lembaga Tabung Angkatan Tentera (LTAT) and Askara, a Sarawak company.

"We thought it would be good to ... merge (the 200 acres) with the 700 acres, as ... we can do proper comprehensive development of the whole 900 acres. It (the purchase) is nothing political, but purely commercial ... No, it is not a bailout!" he exclaimed.

Awan Megah is owned by Selangor Wanita Umno senator Raja Ropiaah Raja Abdullah, and Asta Canggih Sdn Bhd was owned by carpet trader Deepak Jaikishan, but the two fell out when a transaction soured.

azlanDeepak, through Asta Canggih, then filed a suitagainst Awan Megah, the government, Syarikat Tanah Harta Sdn Bhd and Cebur Megah Development Sdn Bhd for alleged breach of agreement and to get back the Bukit Raja land. 

The suit was withdrawn last December, after Boustead purchased an 80 percent stake in Asta Canggih through Bakti Wira Development Sdn Bhd. This paved the way for purchase of the 200-acre site from Awan Megah.

At a press conference following the Boustead annual general meeting today, Lodin was asked to comment on the acquisition of Asta Canggih and the land, through wholly-owned subsidiary Bakti Wira Sdn Bhd.

Admitting that shareholders had questioned the deal, Lodin said the land in Bukit Raja was valued at RM22 per square foot (psf).

“When Asta Canggih approached us, they wanted a high price for it as there is a dispute in court. They had some rights over the land. 

“In the end, we agreed to buy Asta Canggih for RM30 million and Asta Canggih in turn would buy the land from Awan Megah (Sdn Bhd) for RM130 million,” he said. 

“That (set) the price of the land at RM160 million, making it RM18.40 or RM19  psf ... we should get a return of about 26 percent from the land. We sold a portion of the 700-acre (plot) to UMW at RM60 psf ...”

‘Good returns for shareholders’


Asked to comment on concern expressed by several former armed forces personnel over the decisions, Lodin said Boustead is a public-listed company that is under Bursa Malaysia’s scrutiny.

He also said the company’s actions have to be in line with corporate governance and transparency.

The land was purchased in order to generate better returns to Boustead shareholders, including LTAT which holds a 60 percent stake, he noted.

“We have not required any financial assistance for the purchase and it (will be financed by) profits from our property activities and loans which we are going to raise from a land bond.

“Hence, I do not see why LTAT would question the deal as it will add value to their shareholding and ensure strong returns.”

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