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The notice to shareholders was issued via Bursa Malaysia Securities in response to the accusation by substantial shareholder Low Chee & Sons Sdn Bhd (LCS) that the board has proposed to sell two parcels of land at below market value.
One tract of land, measuring 5.5 acres (2.23ha) near Balakong, Selangor, is to be sold for RM7.2 million cash or RM30 psf.
Ho Hup’s 70%-owned subsidiary Bukit Jalil Development Sdn Bhd owns the second parcel of land, measuring 2.6 acres, located in Bukit Jalil, and that is proposed to be sold for RM5.67 million or RM50 psf to Etnik Masyhur Sdn Bhd.
Before the shareholders cast their votes on the resolutions relating to the land sale proposals at the EGM on Dec 31, Ho Hup’s board has issued the notice saying that the two tracts of land were being sold at reasonable prices.
In advertisements published in two major newspapers last Friday (Dec 25), LCS pointed out the first piece of land could fetch at least RM40.50 psf considering that the adjacent land was sold at that price in August 2006, compared with the proposed transaction price of RM30 psf.
Also, LCS said an independent valuer it hired had pegged the market value of the second tract at RM75 psf versus the proposed selling price of RM50 psf.
Nonetheless, Ho Hup’s board said the selling price of RM40.50 psf was based on the net area of the adjacent land that excluded the portion to be surrendered for provision of road, drain and river reserves as well as the buffer zone.
“Should the sales value of the adjacent land be evaluated on the gross total area, the price would be RM30.17 psf which is the same as the valuation of RM30 psf for the first (tract of) land,” the board said in the notice to shareholders on Dec 29.
As for the second tract in Bukit Jalil, the board noted that although it was located in a commercial zone, it was subjected to an express condition imposed by the state authority that it was only to be used for club and recreational purpose only.
“Hence, the proposed disposal at RM50 psf is at fair market value,” Ho Hup’s board said.
Ho Hup’s board also stressed that the land sales would realise an estimated gain of RM9 million that could go towards repaying a portion of its existing bank borrowings and for its working capital requirement.
