Capital World subsidiary pulls out of Malaysian land deal

CATALIST-LISTED property developer Capital World, which recently had its ability to continue as a going concern flagged by its auditor, saw a subsidiary scrap its plans to buy a Malaysian company that held joint development rights for some land in Johor.

Wholly-owned Capital World subsidiary Baiduri Megaria on Thursday revoked the agreement to buy Kekal Efektif, the board disclosed in a bourse filing late that night.

Capital World said that a condition precedent has not been met: Malaysian statutory board Yayasan Pelajaran Johor, which inked a joint development agreement with Kekal in 2016, has not gotten the regulatory approval to degazette the 207.5 acres of land to "Non-Malay Reserve Land" by the deadline.

There is no clarity on when it can do so and "the property demand at the project area has shown signs of weakening", Capital World said, adding that the revocation of the sale agreement will let it reallocate resources to other property projects, and recover the 1.2 million ringgit (S$394,985) deposit.

The revocation is not expected to have a material financial impact on the group's consolidated net tangible assets and earnings per share for the year to June 30, 2020, the board said.

Capital World shed 0.2 Singapore cent, or 16.67 per cent, to S$0.01, before the announcement.