This article first appeared in The Edge Malaysia Weekly on August 8, 2022 - August 14, 2022

ALTHOUGH it has been five years since the MRT Kajang Line commenced operations, Bukit Bintang Plaza (BB Plaza) in the centre of the Bukit Bintang commercial district remains a sorry sight despite the fact that the area now has better connectivity than ever, being in the enviable position of having an MRT station right beneath it.

For decades, BB Plaza was the jewel in the crown for UDA Holdings Bhd. Demolished in 2015, the site was supposed to be redeveloped into a RM3 billion mixed commercial development.

After seven long years, however, the site remains vacant. A check by The Edge found that no work has been done so far, with the area cordoned off.

This has raised the inevitable question of what is going on with the project?

The Edge was given to understand that UDA had sold its stake in the special-purpose vehicle (SPV) that was supposed to undertake the redevelopment of BB Plaza. But it is unclear when UDA’s 30% stake in Zurah Ventures Sdn Bhd was sold to its partner in the SPV, Tradewinds Corp Bhd — the real estate arm of tycoon Tan Sri Syed Mokhtar Al-Bukhary. Tradewinds Corp has a mega project — Tradewinds Square — which is just a stone’s throw away from BB Plaza on Jalan Sultan Ismail.

“UDA has sold the stake to Tradewinds. It has been approved by MoF (Ministry of Finance),” a source who used to sit on the board of UDA told The Edge.

The secrecy over the deal raises even more questions, however, as the delay in the redevelopment of the site has led to UDA incurring costs and loss of revenue to the tune of RM143.55 million as at 2018, according to the Auditor-General’s Report 2019 (Series 1).

As UDA is a company owned by the Ministry of Finance Inc (MoF Inc), the public has the right to know the status of the project.

UDA told The Edge that it did not wish to comment on the project. “The details of the project are private and confidential,” said a representative.

UDA chair Datuk Norliza Abdul Rahim, when contacted by The Edge, confirmed that the 30% stake had been sold to Tradewinds. But Tradewinds has yet to settle a balance payment of some RM126 million.

“That is why UDA is still listed as a 30% shareholder of the SPV,” says Norliza, who was appointed to the position effective from Nov 8, 2021. She is the vice-chief of UMNO’s women’s wing and chief of Penang UMNO’s women’s wing.

A check on the Companies Commission of Malaysia (SSM) website shows that the SPV — Zurah Ventures — is 100%-owned by Zurah Permai Sdn Bhd. UDA is still listed as a 30% shareholder of Zurah Permai, while the remaining 70% is owned by Tradewinds.

In the AG’s Report 2019 (Series 1), which was released in August 2020, the AG had stated that UDA had yet to receive full payment for the RM336.6 million site from its joint-venture (JV) partner as at February 2020.

On June 2, 2014, UDA signed a shareholders’ agreement with Tradewinds for the purpose of setting up the SPV, with UDA holding a 30% stake. On the same day, UDA also signed a sale and purchase agreement (SPA) with the SPV, whereby the SPV would buy the BB Plaza land from UDA for RM374 million.

Based on the SPA, the SPV was supposed to make a 10% payment the day the deal was signed, with the remaining 90% to be paid once all the preconditions in the SPA were fulfilled. The SPV was given two months after the preconditions were fulfilled to pay UDA the remaining 90% of the sale consideration worth RM336.6 million. If the SPV failed to pay the remaining 90% consideration within 12 months of the date of the SPA, it could be charged 8% interest on the balance.

According to the AG, the SPV had failed to fulfil some of the preconditions after 10 months from the date the SPA was signed. The SPV applied for an extension of time to fulfil the preconditions, which the board of UDA approved, but only until Feb 1, 2016, and on the condition that the SPV pay 4% interest a year on the balance of the consideration.

Subsequently, the JV partner (Tradewinds) applied for another extension to pay the remaining 90% of the consideration worth RM336.6 million beyond Feb 1, 2016. On Nov 27, 2017, Tradewinds offered to buy the remaining 30% stake in the SPV from UDA. The proposal was rejected by MoF Inc, however, through a letter dated Sept 30, 2019, to protect the government’s interest in BB Plaza.

Tradewinds’ delay in payment has affected UDA’s cash flow to the extent that the group has been unable to continue with other development projects or to undertake land-banking activities as it lacks the budget to do so, according to the AG.

According to the SSM website, Zurah Permai had total assets worth RM633.18 million for the financial year ended Dec 31, 2021 (FY2021), up 13.43% from FY2020. On the flip side, Zurah Permai had total liabilities of RM582.8 million, all of which are listed as current liabilities.

While the BB Plaza site was left vacant after the building was demolished, another piece of UDA’s land — the site of the former Pudu Jail — has started to attract visitors as the site is being redeveloped into Bukit Bintang City Centre (BBCC).

This shows that with the right investor, UDA’s strategic land parcels can be developed into successful commercial centres, providing much-needed income for the group to expand its businesses elsewhere.

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