KUALA LUMPUR: Magna Prima Bhd does not foresee further delay on the land purchase from Ho Hup Construction Company Bhd’s unit following the latter’s board revamp.

Magna Prima CEO Yoong Nim Chee said the company would soon establish a dialogue with Ho Hup’s new board, which was appointed at the EGM on Wednesday after the removal of the seven directors.

To recap, the property developer was granted an injunction by the court to stop Ho Hup’s unit Bukit Jalil Development Sdn Bhd (BJD) from selling the 10.865 acres (4.4ha) contentious land, located in Bukit Jalil, south Kuala Lumpur, to others.

The court has ordered Ho Hup to hold an EGM to seek shareholders’ approval for the land sales to Magna Prima’s unit Permata Juang Sdn Bhd.

Despite the recent change at Ho Hup’s board, the injunction and court order remain intact. Thus, the new board of directors is obliged to call for the EGM. The meeting is scheduled for March 29, according to the circular to shareholders.

“We will try to contact the Low family to persuade them to support the deal. This is what we will be going to do over the next few days. We have already paid 30% of the purchase consideration.

“This, however, is purely a persuasive effort, nothing legal. We will try to be friendly to everyone,” Yoong told The Edge Financial Daily in a phone interview.

Low is one of the two largest shareholders of Ho Hup with about 25% stake. Ho Hup’s former deputy chairman Datuk Vincent Lye holds a 27.95% interest and was removed along with six other directors.

Magna’s Yoong said he was confident that the land acquisition, which was proposed in March last year, would be executed in a timely manner.

However, Low was indeed the substantial shareholder who had opposed the land sales to Magna Prima via proxy votes considering the transaction was categorised as a related party transaction.

Consequently, Ho Hup’s former board led by Lye withdrew the proposed land sales at the eleventh hour before the EGM in July last year.

Magna Prima had run into several setbacks with the former board, which was led by Lye and managing director Lim Ching Choy, over the BJD land deal as the former board wanted to dispose the land to a third party.

It is worth noting that Lye is the single largest shareholder of Ho Hup via Extreme Systems Sdn Bhd.

The tract is a vital part of Magna’s growth strategy as it has plans to undertake a development project there with a gross development value (GDV) of more than RM100 million.

Although Magna’s Yoong estimated it could generate some RM25 million in profits from the project, industry observers believe that the developer could derive more given its prime location.

Furthermore, the adjacent land is the Lai Meng Girl’s School future site, which was also originally owned by Ho Hup. The smaller tract was bought over by Santari Sdn Bhd last year.

This article appeared in The Edge Financial Daily, March 19, 2010.