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Saturday, October 10, 2009

Building an iconic expo city

“It will be a truly integrated city attracting all types of people and nationalities that will have something to interest each one of them. The city will create a huge influx of tourists,” says Ch’ng.

Through much of this year, Malaysia Pacific Corp Bhd chief executive Datuk Bill Ch’ng’s business compass has been focused on the iconic Asia Pacific Trade & Expo City (APTEC) – the centre-piece of the company’s project in Iskandar Development.

Ch’ng wants to turn the RM1.6bil APTEC into Asia’s biggest trade and distribution hub with hotels, service apartments, office towers, retail malls, international entertainment city, factory outlets, Malaysia cultural heritage village, and other tourist attractions.

Ch’ng ... ‘I want to build it all at one go.’

“It will be a truly integrated city attracting all types of people and nationalities that will have something to interest each one of them. The city will create a huge influx of tourists,” says Ch’ng.

APTEC’s other unique component is LakeHill Resort City, a mixed-zone development comprising residential, commercial and tourism attractions.

This is located at Iskandar’s Eastgate Development Zone.

Once completed, both developments will have a combined gross developmental value of RM6.6bil.

“All the 22 parcels of land in the LakeHill Resort City, totalling 638 acres, are unencumbered. The 2008 valuation of the land is at RM450mil, but this will increase once the development starts,” says Ch’ng in an interview with StarBizWeek.

Some of the parcels of land, he points out, have been earmarked for joint venture (JV) purposes.

“Cash from these JVs will provide immediate profits to pay future dividends and cash for funding,” he says.

Interestingly, MP Corp is the only non government-linked company currently involved in the development of the massive Iskandar Regional Development Authority (IRDA).

The masterplan has already been approved and MP Corp has started on infrastructures and civil works and is seeking approval for each of the 22 parcels within the development.

MP Corp’s sole partner in the IDR projects – APTEC and LakeHill – is AmanahRaya Development Sdn Bhd, a subsidiary of AmanahRaya Bhd.

AmanahRaya, wholly owned by the Minister of Finance Inc, has a 22% interest in the joint venture.

Renowned architect

Ch’ng, 70, was the original architect who master-minded the proposed Genting Highland Casino Hill Resort between 1965 and 1972 which encompassed a ‘casino’ as an economic icon of the period to attract tourism and foreign exchange earnings.

He was also named one of the “50 Asia’s Top Corporate Takeover and Turnaround CEOs” by Business Weekly International magazine in 1989, for turning around the Emporium Group Singapore from bankruptcy and also Bousted-Co Singapore and Bousted PLC, United Kingdom from the doldrums.

He was appointed by tycoon Tan Sri Quek Leng Chan as an advisor and subsequently chief executive officer of MP Corp in 2005.

In December 2006, Ch’ng acquired a controlling stake of 60% in MP Corp through his Hong Kong-based private vehicle Top Lander Offshore Inc.

Ch’ng recalls that when he first took over the reins of the company “it was like taking over a sick baby”. Back then, MP Corp was developing low to medium cost houses in the area, now earmarked for the Iskandar development, which he put an immediate halt to. In place, he drew up a new masterplan which got the nod last year.

His mission now is to woo strategic investors – local and foreign – into the project.

By year end, MP Corp will launch its residential properties.

“Our office in Hong Kong is also coordinating and marketing APTEC and LakeHill in Hong Kong and China,” he enthuses.

Ch’ng sees huge potential in Iskandar-Singapore, as he sees strong similarities to Shenzen and Hong Kong economic success story.

“Iskandar-Singapore’s combined logistic, strategic and natural geographical advantage will be the epicentre of the Asia Pacific, Indian Continent and Middle East’s huge consumer market population,” he says.

Originally, the plan was to complete the whole development in 12-15 years but Ch’ng wants to fast track it to within 8 years.

“I want to build it all at one go. You cannot do it on a piecemeal basis. That always fails. You need something very unique and an icon to attract foreigners to come in. And APTEC will spur the imagination of foreign direct investments,” he says.

Ch’ng is now targeting Chinese exhibitors to take up 50% of its wholesale permanent exhibition centre comprising of 2.25 million nett exhibition space.

Meanwhile, initial construction will be financed by bank borrowings.

MP Corp is currently in discussions with some financial institutions to raise a term loan to undertake the project. MP Corp is also seeking a tax-incentive status similar to the ones obtained by Medini and Puteri Harbour in Nusajaya.

In the fourth quarter to June 2009, revenue grew 16% to RM2.73mil year-on-year; the company made a loss of RM915,000 from a profit of RM8.56mil in the previous year’s corresponding quarter.

For the full year, it made a net profit of RM54mil from RM57mil previously.

As at June, the company’s net asset value per share is RM1.55. The counter finished trading on Friday at 54.5 sen.

Two weeks ago, MP Corp proposed a two-renounceable-call rights issue of up to 129.448 million shares together with 129.448 million free detachable warrants.

The rights issue is at RM1 per share; the first call of 42 sen will be fully payable in cash by shareholders while the second call of 58 sen will be capitalised from the retained profits account.

The proposed rights issue is expected to raise gross proceeds of up to about RM54.37mil, of which RM30mil will be used to retire advances from Top Lander.

The proposed three-for-four rights issue is being undertaken on a minimum subscription basis to enable the company to raise funds without incurring interest costs.

MP Corp had determined a minimum subscription of 76.827 million rights shares and the company will obtain a letter of undertaking from its substantial shareholder, Top Lander Offshore Inc, to subscribe for all the rights shares.

The proposed rights issue is expected to be completed by the first quarter of 2010.

By The Star (by Tee Lin Say)

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