Wednesday 13 Nov 2024
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KUALA LUMPUR (July 12): Kimlun Corp Bhd (KL:KIMLUN) is forming a joint venture company (JVco) with Singapore-listed Astaka Holdings Ltd’s (AHL) indirect 50.99%-owned unit Astaka Capital Sdn Bhd (ACSB) to develop a residential serviced apartment project in Johor Bahru.

The Johor-based construction company said its wholly-owned subsidiary Kii Amber Sdn Bhd has entered into a binding term sheet with AHL’s units, including ACSB, Astaka Padu Sdn Bhd (APSB) and Seaview Holdings Sdn Bhd — a company linked to AHL’s controlling shareholder Datuk Daing A Malek Daing A Rahaman — to form the JVco, according to its filing on Friday.

ACSB and Kii Amber will form the JVco on a ratio of 51:49 respectively, to undertake the project.

In a joint statement on Friday, the companies said that the project is related to phase three of Arden @ One Bukit Senyum, which is slated to launch in the fourth quarter of 2024, with construction expected to be completed within 48 months.

Under the agreement, ACSB will subscribe to 509,900 shares in the JVco at an issue price of RM1 per share, while Kii Amber will subscribe to 490,000 shares.

The JVco has also proposed to acquire a parcel of land measuring 1.662 acres in Johor Bahru for RM61.5 million or RM77 per sq ft to be developed for the residential serviced apartment project.

For the purchase of the land, the JVco entered into a sale and purchase agreement with APSB (registered proprietor of the land) and Seaview (beneficial owner of the land).

Kimlun, whose share price has risen 85% year to date, said the JVco shares subscription will be satisfied wholly in cash from internally generated funds, while the land acquisition will be funded by external borrowings from third parties, including banks, loans or capital injections from each shareholder of the JVco.

Kimlun’s cash and bank balances amounted to RM52.26 million, while total borrowings stood at RM522.24 million as at end-March 2024, according to its latest financial statement.

Under the JVco, ACSB will oversee day-to-day operations, handle coordination between all parties, finances and reports, and obtain necessary licences and permits for the project.

Meanwhile, Kii Amber will oversee construction by the main contractor (whether Kii Amber or a related company to be appointed), appoint subcontractors and assist ACSB with the project development.

Kimlun said that the proposed project development and the JVco are expected to contribute positively to the group’s future earnings.

“The proposed JVco shares subscription provides an opportunity for Kimlun group to participate in the development of high-end service apartment development project in a prime area of Johor Bahru,” it said.

The Arden residential apartment has a gross development value (GDV) of RM600 million, comprising 600 premium serviced residence units in a skyscraper building, according to statement.

It added that it would seek shareholders’ approval for the land acquisition and the project development at a extraordinary general meeting to be convened at a later date.

Shares of Kimlun finished 10 sen or 7.46% higher at RM1.44 on Friday, giving the group a market capitalisation of RM508.87 million.

 

Edited ByEsther Lee
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