KUALA LUMPUR (Oct 14): Fajarbaru Builder Group Bhd (KL:FAJAR) said on Monday that it will pay Penang Development Corp (PDC) RM111.45 million to undertake a joint development of a medical city and mixed development hub in Bandar Cassia, Batu Kawan.

The payment is for the purchase of land measuring 51.17 acres, for the Medi-City development, Fajarbaru said.

The purchase represents ‘part one’ of the 235.8-acre land acquisition, in which the terms and conditions outlined in the letter of offer will be finalized in a master purchase and development agreement (PDA) between Fajarbaru and PDC, Fajarbaru said in its filing. Further announcements will be made upon the signing of this agreement, it said. 

“Fajarbaru shall purchase Parcel 1 land measuring 51.17 acres in the year 2025, and is given the right to purchase Parcel 2 land measuring 184.63 acres within 12 months from the date of the master PDA,” it said.

The development presents an opportunity for Fajarbaru to expand its business activities in Penang, and not limited to the development of Medi-City, it said.

Within Parcel 1, 15.3 acres have been designated for the development of healthcare-related components, including a 200-bed hospital and various healthcare and medical facilities, Fajarbaru said.

The remaining 35.8 acres in Parcel 1 is planned for mixed-use development, featuring residential and commercial components, it added.

Some of the conditions precedent for the master PDA includes pre-establishment approval for hospital zoning, to be obtained from the Ministry of Health, and identifying an operator for the first hospital within 12 months from the date of the master PDA.

PDC is also required to obtain the approval of the ownership policy from the state authority for the joint development with freehold status in perpetuity within 12 months from the date of the master PDA.

Fajarbaru, meanwhile, needs to obtain shareholders’ approval within six months from the date of the master PDA.

In a separate statement, Fajarbaru said the 235.8-acre Medi-City master plan will encompass a wellness village, medical education hub, hybrid health-tech park as well as a waterfront commercial centre, Fajarbaru Global Park and seaview residence.

Fajarbaru also said there will be profit sharing with PDC at a minimum rate of 15% on Parcel 1 land’s mixed development, and certain health and medical components to be identified in the master PDA.

The profit sharing will be payable in instalments within eight years from the date of the master PDA, it said.

The company will fund the project through a combination of internally generated funds, bank borrowings, and equity funding, of which the proportion will be determined at a later stage.

At end-June, Fajarbaru was in a net cash position of RM83.65 million.

Shares in Fajarbaru closed half a sen or 1.2% higher at 43 sen, giving it a market capitalisation of RM320.22 million.