The first property project on land alienated in relation to Penang’s massive highway and traffic mitigation venture will have a gross development value of RM800mil.

Ewein Bhd and Consortium Zenith BUCG Sdn Bhd will undertake the mixed development project on 3.67 acres in Bandar Tanjong Pinang.

In a filing with Bursa Malaysia yesterday, Ewein said that it was expected to start in the second half of this year.

Yesterday, the Penang Island City Council approved the building plans for the development on the parcel of land alienated to Ewein Zenith, a 60:40 joint venture between Ewein and Consortium Zenith.

The parcel forms part of the 110 acres of freehold land to be alienated by the Penang government to Consortium Zenith or its nominees as partial payment for construction works on the RM6.3bil mega project which includes a 6.5km undersea tunnel. Consortium Zenith is also allowed to collect toll for the undersea tunnel for 30 years.

Ewein did not reveal the specifics of the proposed development in its announcement yesterday, but it did mention broadly in a circular to shareholders dated June 12, 2014, that the development would be a combination of residential and commercial units.

The circular to shareholders named the consortium’s shareholders as Datuk Zarul Ahmad Zulkifli’s Zenith Construction Sdn Bhd with a 99.94% stake, China state-owned Beijing Urban Construction Group (BUCG) (0.02%), niche contractor Juteras Sdn Bhd (0.02%) and Sri Tinggi Sdn Bhd (0.02%). Past press reports had assigned different equity stakes to the consortium members, including a 10% stake each for BUCG, Juteras and Sri Tinggi.

Ewein Bhd, via unit Ewein Land, will pay RM79.8mil to Consortium Zenith for the 3.67-acre land that has been valued at RM133mil (equivalent to 60% of the land value).

This marks the first property development project undertaken by Ewein, whose core business is precision and fabricated sheet metal manufacturing.

On the rationale for the diversification, Ewein said it was to mitigate any risk of dependency in its core business that fell within the electronics industry, “a competitive and rapidly evolving industry.”

The company said its proposed joint venture with Consortium Zenith was expected to result in a diversion of more than 25% of the net assets of the group to the property development business.

According to the circular, the group envisaged that profit would be shared in accordance to the respective shareholding percentages of Ewein Land and Consortium Zenith in Ewein Zenith.

Consortium Zenith was awarded the feasibility studies and detailed design works for Penang’s largest infrastructure project following an agreement inked with the Penang government in October 2013. The project comprises a RM6.3bil integrated road transport and traffic mitigation project comprising a 6.5km undersea tunnel, a 4.2km bypass from Gurney Drive to Tun Dr Lim Chong Eu Expressway, a 4.6km bypass between Tun Dr Lim Chong Eu Expressway and Bandar Baru Air Itam, and a four-lane 12km road from Jalan Tanjung Bungah to Teluk Bahang.

Source: StarProperty.my