Ivory Properties aborts residential development in Kedah AirportCity

• Ivory Properties told Bursa Malaysia on Monday (Aug 15) that it had received a letter from ECK about the termination of the term sheet that the two companies inked on Aug 2, 2021 for the development.

KUALA LUMPUR (Aug 15): Penang-based Ivory Properties Group Bhd has aborted its plan to jointly develop residential components with ECK Development Sdn Bhd on 135 acres of land in AirportCity and Aerotropolis in Kuala Muda, Kedah.

Ivory told Bursa Malaysia on Monday (Aug 15) that it had received a letter from ECK about the termination of the term sheet that the two companies inked on Aug 2, 2021 for the development.

“The term sheet was terminated due to the rescission of ECK's right to participate in the proposed Kulim International Airport project, which makes it impossible for ECK to fulfil the prerequisites required for the execution of the term sheet. Both parties are thus released from their obligations under the term sheet.”

But last July, Kedah Menteri Besar Datuk Seri Muhammad Sanusi Md Nor announced that ECK was no longer involved in a joint venture with the government to develop the airport, following ECK's failure to comply with the terms of the agreement, including paying a land acquisition deposit of 125% of the estimated land acquisition of RM2.1 billion.

Ivory said the termination will not have any material financial effect on the company for the financial year ending March 31, 2023.

The deal had required Ivory Properties to provide a RM1 billion corporate guarantee in favour of KXP AirportCity Holdings Sdn Bhd — a subsidiary of Kedah Development Corp — for the due performance and observance of ECK’s obligation under the airport project. The guarantee was valid until July 31 this year.

Ivory Properties slipped into the Practice Note 17 (PN17) status on Aug 1, after Messrs KPMG PLT flagged material uncertainties about the property developer’s ability to continue as a going concern. It reported a net loss of RM79.51 million for the financial year ended March 31, 2022 (FY22), while the group’s liabilities exceeded its current assets by RM60.22 million.

Ivory’s share price fell half a sen or 9.1% to close at 5 sen on Monday, giving it a market capitalisation of RM24.5 million.