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Canal City Background
The Selangor state government is set to gain an additional RM550 million under the new terms of agreement signed with Tropicana Corporation Berhad over the sale of an 1,172 acre land in Kuala Langat for RM1.3 billion in April 2013.
Mentri Besar Mohamed Azmin Ali said the state government is now entitled to a 9% share of the Gross Development Value (GDV) of the land, the payment period was shortened from 20 years to 12 years, and that Sapphire Index Sdn Bhd (SISB), wholly owned subsidiary of Tropicana, is barred from selling the land to third parties.
"Under these new terms, Mentri Besar Incorporated (MBI) estimates that the state government can gain an additional RM550 million in returns," Azmin told the state assembly today.
He said the estimated returns are calculated based on Tropicana's submission to Bursa Malaysia that the land, formerly known as Canal City, in Kuala Langat near Kota Kemuning has a GDV of about RM20 billion.
The land was initially sold for RM587 million at a value of RM18.50 per sq ft payable in 12-year installments, with the state government entitled to 5% GDV share and 3% profit share, amounting to a total of RM1.3 billion payable over 20 years.
However, 11 months after the sale and purchase agreement was signed between MBI and SISB, the latter sold 308.72 acres of land to Prominent Stream Sdn Bhd, a wholly-owned subsidiary of Eco World Development Sdn Bhd, at a value of RM35 per sq ft or RM470 million, with a net profit of RM170 million.
Azmin said the old agreement was lopsided to the advantage of Tropicana and the new MBI management had reviewed the terms so to better safeguard the state's interests.
"The new MBI management reviewed the terms so that the interests of the state government are protected, with fairer returns that are secured and guaranteed within a more acceptable period," he said.
