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Tuesday, July 5, 2011

Last lifeline for UDA

Kuala Lumpur: UDA Holdings Bhd’s survival now rests on the Ministry of Finance’s (MOF) final decision on the joint-venture partner for UDA’s RM6 billion Pudu Jail redevelopment project.

Under fire over the last few weeks, UDA’s chairman Datuk Nur Jazlan Mohamed stressed that the Pudu Jail development is the last lifeline of the group that has RM900 million debt and RM90 million in cash.

“I proposed three solutions to the government. To pardon UDA’s debt, to close down this company altogether or to allow us to work with a reliable partner because we cannot afford to fail in this project,” he said in an interview last week.

The company has appealed to the government to waive its RM414.3 million loan to Khazanah Nasional Bhd and reschedule payment of another RM385.2 million Treasury Loan.

“Even if the loan is pardoned, it still does not solve our problems. We need money to sustain the group and to further expand,” said Jazlan.

Although UDA has assets worth RM2 billion, its annual operating cash flow is about RM60 million a year. Its cash reserve is also falling from RM125 million in 2009 to about RM90 million now.

UDA has come under attack for allegedly abandoning the Bumiputera agenda after it chose not to appoint local joint-venture turnkey investors for the proposed project.

But Jazlan rebutted that there are no Bumiputera companies that are financially capable to take on the project in the first place.

“Even if there is, like AZRB, it did not bid for the project knowing well the financial risk involved. If UDA is financially capable, we would have undertaken the project on our own,” he added.

The proposed joint-venture partner would have to spend an estimated RM600 million to construct a retail mall complex and a public transportation hub that can house 180 buses.

The proposed bus terminal is estimated to bring in between 100,000 and 120,000 people daily. This would help boost UDA’s income via retail space rentals and car-park operations at the new complex.

While the ownership of the complex belongs to UDA, the cost to build it will be borne entirely by the partner.
Under the joint-venture term, the partner is only free to build offices, residential and hotel after it has completed the main retail mall, after which it can sell or lease the building.

“The MOF needs to make a decision on what is best for UDA. Once the retail mall is completed, it can give a recurring income of about RM300 million that can definitely help UDA pay its debt and move forward,” he urged.

“UDA is banking on the Pudu Jail redevelopment to stabilise the company. I hope the government won’t give in to the pressure groups and make a sound decision with UDA’s interest at heart,” he said.

“In this case, the Bumiputera contractor issue is secondary. UDA’s long-term sustainability is foremost,” he reiterated.

Renamed the Bukit Bintang City Centre (BBCC) development, UDA submitted the names of its preferred joint-venture partner to MOF last month.

It was earlier reported hat only one out of 11 foreign and local companies bidding for the BBCC project was a fully-owned Bumiputera company.

By Business Times

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