CME requests early payment for Kuantan project

PETALING JAYA: CME Group Bhd has entered into a supplemental agreement (SA) with developer Tanah Mestika Sdn Bhd to vary the terms of a joint venture agreement (JVA) dated Feb 10, 2015 for a mixed development on a 1.47 acres leasehold land in Kuantan, Pahang.
Land owner CME has requested from Tanah Mestika for an early payment of land owner entitlements. In consideration of this early payment, both parties agreed with the net present value of land owner's entitlement at RM7.08 million by taking into account a discount rate of 9% for four years.
Under the JVA, CME will be entitled to a certain number of buildings/properties built on the land with equivalent value of RM10 million. CME will have the option to require Tanah Mestika to pay RM10 million cash as the landowner's entitlement in lieu of the units built in the project within 36 months or such other extended period as may be agreed in writing.
The parties agreed that the JVA will be amended, in consideration of the early payment of CME's entitlement. CME will transfer the said land on an "as-is-where-is basis".
"In the event this SA is not fulfilled, not completed or terminated for any reason whatsoever, the parties agree that the terms of the JVA shall remain in place and the parties shall revert to the terms thereunder contained.
"In the event this SA is completed, the JVA shall be deemed completed and neither party shall have any further claims in relation to this SA and the JVA save and except for any antecedent breaches," CME said in a stock exchange filing.
To recap, the estimated gross development value and gross development cost of the project are RM124.42 million and RM100.17 million respectively, based on the preliminary planning stage.
The proposed JV allows CME to unlock the value of the land and is in line with CME's long-term strategy in diversifying its earnings base and to deliver greater value to the shareholders of CME.