In a statement yesterday, KFH said there was “no legally binding agreement” with the Ipoh-based developer because neither party had committed to signing a sale and purchase agreement.
“A conditional letter of offer was executed between KFH and YNH but the sale and purchase agreement was not executed as the conditions stipulated in the conditional letter of offer which included the necessary approvals from KFH’s board of directors, shareholders and/or committees were not obtained,” it said.
It added that both parties had had “several discussions and meetings thereafter” to agree on a revised structure so as to meet the those conditions.
“As both parties were unable to agree on a revised structure and terms of the sale, KFH has decided not to proceed with the purchase of the said Menara YNH.
“We may review our decision in the future, should we be able to find a viable structure to enable us to participate in the sale transaction,” KFH said.
KFH had offered to buy a 50% interest in YNH Land Sdn Bhd’s Menara YNH early last year. YNH Land is a unit of Kar Sin Bhd, which in turn is a wholly owned subsidiary of YNH Property.
YNH told Bursa Malaysia on Tuesday that it had been notified in writing by KFH that the latter would no longer be proceeding with the formalisation of the sale and purchase agreement.
In the same note to Bursa, YNH said it was seeking legal advice on the matter.
“As such, the board will consult our legal advisers on all of the options available to our group, including but not limited to specific performance and/or seeking damages from KFH,’’ YNH said.
Meanwhile, analysts expect the YNH-KFH deal to fall through but it would not have any impact on YNH’s earnings.
ECMLibra Investment Research said in a note that the news was “not surprising”.
“The partial sale of Menara YNH had been widely expected to fall through following long and protracted negotiations since the offer letter was signed on Jan 11, 2008.
“Nevertheless, the positive thing we can see from this turn of events is that the uncertainty of the sale to KFH has finally been drawn to a close,” it said.
The research house said it was making no revision to its earnings estimate as it had already disregarded the earnings contribution from the sale to YNH.
RHB Research in its report said the deal falling through was “not a surprise to us”, and added that it was not revising its earnings forecast for the developer.
An analyst said YNH would have no problem finding another buyer for the tower, albeit at a lower selling price than the RM920mil KFH had agreed to.
Menara YNH, which is yet to be built, will be located in Jalan Sultan Ismail, Kuala Lumpur. Selling prices in the area have nosedived 20% to 25% since the offer by KFH.
“The economy is already improving but we expect flattish growth for the property sector in 2010. It would take a while for property prices to match the levels they were at in the last quarter of 2008,” an analyst said.
Zerin Properties chief executive officer Previndran Singhe concurred that YNH would have no problem finding a buyer for Menara YNH, adding that prices of properties within the area were showing signs of improvement.
“Property prices may reach last year’s levels by end-2010. But by 2011, there should be no problem for YNH to sell at a higher price (than what was offered by KFH),” he said.
By The Star (by Eugene Mahalingam)
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