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Saturday, January 9, 2010

Ho Hup stakeholder may sell land to fund future projects

HO HUP Construction Co Bhd may sell part of its land in Bukit Jalil, Kuala Lumpur, if the funds raised from an alternative revamp plan is not enough to finance its developments, said Datuk Low Tuck Choy.

Low is the second biggest shareholder of Ho Hup and is trying to block an existing restructuring plan, which involves a 95 per cent capital reduction.

His alternative plan involves raising RM25.5 million from the issue of a renounceable one-for-four rights issue of 25.5 million irredeemable convertible preference shares (ICPS) priced at RM1 each with two free warrants for each ICPS subscribed.

The money will probably be used to kickstart its RM2 billion Jalil City mixed-development project. But there were concerns that it may not be enough.

"We will sell more land in Bukit Jalil if we need cash in the future to fund our activities," Low told Business Times yesterday.

Low said his aim is to strengthen the financially-troubled company, which has been in the red since 2006.

In fiscal 2008, its net loss was RM56.2 million.

Ho Hup was the ninth biggest gainer on Bursa Malaysia yesterday following news of the alternative revamp proposal.

The stock rose 17 sen to close at RM1.44, with 27 million shares traded.

Low plans to replace the existing directors as he felt they were not acting in the best interest of shareholders. He argues that the sale of two plots of land in Balakong and Bukit Jalil for RM7.2 million or RM30 per sq ft and RM5.7 million or RM50 psf, respectively, was below market value.

Low plans to remove Ho Hup deputy chairman Datuk Vincent Lye Ek Seang, the company's largest shareholder with a 28 per cent stake via Extreme System Sdn Bhd, group managing director Lim Ching Choy and five other directors.

"I will wait to see what happens at the special meeting on February 4," Low said.

Meanwhile, Lim declined to comment on the alternative revamp plan.

Lim, who joined Ho Hup on June 1 2009, is spearheading Ho Hup's corporate restructuring to reduce debt, inject new capital, sell non-core assets and generate revenue to become profitable.

"We are in line with what the authorities want," Lim said.

Ho Hup has proposed a 95 per cent capital reduction and a new share-placement exercise that will see new investors owning 59.5 per cent of the company, beefing up its capital base.

The money will be used to develop Jalil City.

According to the plan, Ho Hup is expected to get approvals from the authorities by March and be removed from PN17 by June.

By Business Times (by Sharen Kaur)

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