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3Cnergy to sell three plots of land at Puteri Harbour
3CNERGY – formerly known as HSR Global – is putting up three plots of freehold land totalling 1.86 million square feet (sq ft) at Puteri Harbour in Malaysia for sale by public tender.
The public tender will be launched on Jan 23 by wholly-owned subsidiary 3C Marina Park (3CMP) through real estate agent Knight Frank Malaysia.
3Cnergy, which is controlled by Tong Kooi Ong, owner of news publication The Edge, had acquired 3CMP in August 2016 with the intention to develop the sites into a mixed-use development called MarinaPark.
But the group had to defer the development for a variety of reasons. These include regulatory changes in Malaysia to proposed integrated developments, the government's decision to freeze approvals for residential properties above RM1 million, and a property market that had generally deteriorated.
The regulatory changes require the building plan for a development to be finalised upon launch. This means that when the first phase of MarinaPark is launched, the group would have to finalise all the building plans for subsequent phases yet to be launched, with no allowances for changes thereafter.
Mr Tong, the chairman, and then-CEO Anne Tong had said in a statement in the group's 2017 annual report that the integrated development needed the flexibility to cater to changes in market conditions and demand. Moreover, minor changes to layouts and engineering aspects are inevitable for a large integrated development that will take years to complete.
They added: "A lukewarm response to our launch would result in huge negative cash flows, and hurt the future success of this development. Critically, we believe we have a very prime site where the land will only get more valuable over time. So, in essence, time is on our side."
But 3Cnergy on Wednesday said the regulatory restrictions and adverse market conditions are likely to persist, and it will not be commercially viable for the group to proceed with the development of the properties in the foreseeable future.
The company has outstanding bank borrowings of RM148.4 million (S$49.1 million) on the properties, of which RM36.6 million is due in 2020. It has cash in hand of S$4.5 million.
3Cnergy has considered raising additional funding to finance the repayment of the loan, or to dispose of the properties. In the event that the offers received match or exceed the reserve price and terms required by the group, 3Cnergy intends to proceed with the disposal.
The public tender will be opened until 3pm on March 12. The land areas for each of the three plots are 669,805 sq ft, 771,083.49 sq ft, and 419,232 sq ft.