Transcorp cancels China project MOU, requests refund of S$6m good faith deposit

TRANSCORP Holdings has cancelled a memorandum of understanding (MOU) with Dongshan Dibao Property to develop residential apartments, recreational facilities and retail units in Fujian, China, and is asking for the full refund of the S$6 million it paid in a good faith deposit by March 31, 2019.

Transcorp has written to Dongshan and its sole owner Cheng Ming Ming on Thursday to give the required one month notice period for termination of the tripartite MOU, which was originally signed on Oct 31, 2017, it said in a regulatory filing on Friday.

On the rationale for the move, the vehicle importer said the project's potential risks outweigh its potential benefits, considering the group currently does not have the necessary expertise, financial and operational resources to see it through. The company instead would like to focus its financial resources on the expansion of its existing car rental business which it believes carries less risk.

Dongshan previously obtained land for development at a local government open tender for 56.5 million Chinese yuan (S$11.4 million).

Transcorp had proposed to take up to a 51 per cent stake in the development project through either subscription of new Dongshan shares, entering into a joint development contract, entering into a funding and management contract or via a combination of those options.

Transcorp shares closed on Thursday down 0.2 Singapore cent at S$0.004.