GMOC, which has a fully paid-up capital of US$185.51 million (RM589 million), is undertaking a massive project to build the world’s largest shopping mall in the Hebei province.
In an announcement to Bursa Malaysia, Berjaya Land Bhd said its wholly-owned subsidiary Berjaya Leisure (Cayman) Ltd (BCayman) will sell 35.7% of GMOC to Carnival Group or a relevant affiliate. BCayman presently has a 51% stake in GMOC.
Meanwhile, Berjaya Times Square (Cayman) Ltd (BTS-Cayman), which currently holds a 49% stake, will also sell a 14.3% stake in GMOC. Tan holds an 80% stake in BTS-Cayman, while his son Rayvin holds the remaining 20% stake.
This confirmed a January report by The Edge, quoting sources, that Tan was looking for ways to raise cash to build the Great Mall of China, which had fallen behind schedule. The proposed methods also included finding a new investor to take up a stake in GMOC.
“The MoU (memorandum of understanding) provides for satisfactory due diligence investigation to be conducted by Carnival Group within a period of 40 days. The parties agree to negotiate in good faith to enter into a sale and purchase agreement for the proposals no later than 30 days after the expiry of the due diligence period or a later date as may be mutually agreed,” said Berjaya Land in the filing.
The company said the consideration for the share sale will be subject to negotiations between the parties with reference to, among other things, the results of the due diligence investigation and an independent valuation on GMOC to be engaged by Carnival Group at its own costs and expenses.
Listed in Hong Kong, Carnival Group and its subsidiaries and affiliates are mainly involved in theme-based leisure and consumption business, said Berjaya Land. The former develops and operates integrated large-scale tourist complex projects, which include theme parks, hotels and shopping malls.
The Great Mall of China is an ambitious plan set forth by Tan. When he announced the development of the shopping mall sometime in 2012, he said it will cover 18.5 million sq ft, which will easily dislodge the 12.5 million sq ft Dubai Mall as the world’s largest shopping mall by a comfortable margin.
The first phase of The Great Mall of China was scheduled to be completed in October last year, but as at January 2014, according to The Edge’s report, citing sources, it was only one-sixth completed. The delay was because GMOC has utilised a significant amount of its capital to build the first phase.
Phase one was intended to be financed through GMOC’s paid-up capital and the sale of retail space. However, as at April 2012, GMOC was reported to have burnt through half its paid-up capital.
Because of the delay, there has been no revenue from the sale of retail space as envisaged, which explains why Tan is looking for a fresh capital injection for the project.
The first phase is planned to offer one million sq ft of retail space, a one million sq ft pedestrian mall, an extreme park, a water park and a family park. The entire project was initially slated for completion in 2017.
This article first appeared in The Edge Financial Daily, on September 3, 2014.
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