Tadmax Resources Bhd (Tadmax) had announced last Friday that the Company had on 20 February 2014 entered into a share sale agreement with Ivory Merge Sdn Bhd to dispose off 310 acres of land for RM317,334,600 to be satisfied entirely in cash.
The land is held via its wholly owned subsidiary, Tadmax Power Sdn Bhd (TPSB) is part of a 379 acres piece of vacant land bearing the master title No. PN 7375 Lot 72779, located in Pulau Indah, Klang, Selangor. Tadmax is formerly known as Wijaya Baru Global Bhd, while TPSB was formerly known as Wijaya Baru Development Sdn Bhd prior to November 2013.
The Group was infamous for their complicity in the RM12.5 billion Port Klang Free Zone (PKFZ) scandal which has caused massive losses for the Malaysian Government. Kuala Dimensi Sdn Bhd (KDSB) which was appointed the turnkey developer by Port Klang Authority (PKA) for PKFZ is a subsidiary of Wijaya Baru Global Bhd (Tadmax). KDSB also sold the controversial 753 acres piece of land in Pulau Indah to PKA at the astronomical price of RM1.09 billion in 2004.
At the same time, Wijaya Baru Global and its other subsidiaries were appointed as main and subcontractors to the project. KDSB and Tadmax are both embroiled in legal disputes with PKA, while certain officers of both companies are being prosecuted for fraud by the Attorney-General over the PKFZ fiasco.
Tadmax’s single largest shareholder then was Datuk Seri Tiong King Sing, who was also the Chief Executive Officer of KDSB. He has however sold his 30.15% equity in Tadmax in 2011, and holds only a 5.53% interest in the company today.
The directors of Tadmax includes its Chairman, Dato’ Seri Abdul Azim Zabidi, the former treasurer for UMNO and its Chief Executive Officer, Dato’ Faizal Abdullah who is the Deputy Chairman of UMNO Kapar Division.
It was also announced on Bursa Malaysia that Dato’ Faizal had bought additional 6,735,000 shares of Tadmax 2 months ago, between 9th to 12th December 2013 at an average of 34.5 sen per share to increase his stake in the company to 17.8 million shares or 4.78%. Since the announcement of the above sale, the price of Tadmax closed at 60.5 sen as of 21 February 2014.
Ivory Merge on the other hand, is a wholly-owned subsidiary of 1MDB Real Estate Sdn Bhd, which in turn is a wholly-owned subsidiary of Malaysia’s controversial sovereign wealth fund, 1Malaysia Development Bhd (1MDB).
Based on the above facts, several questions must be asked to 1MDB.
- 1MDB is current heavily in debt with an estimated burden of more than RM30 billion. It is also currently pursuing to mega-property development projects in Tun Razak Exchange and Bandar Malaysia, for which 1MDB is also raising additional debt. We would like to find out why 1MDB saw it as suddenly crucial to “invest” an additional RM317 million to acquire a piece of land in Pulau Indah?
- Is 1MDB aware of the fact that the same piece of land, purchased at RM23.50 per square feet (psf), was last valued at only RM9.93 psf in August 2011? The valuation was conducted by Tadmax itself as was report in the company’s 2012 Annual Report (pg 113) – RM163.9 million for the 379 acres. While a new valuation was indeed carried out prior to the above sale in January this year, the question must be asked as to how the value of the vacant land increased by a massive 136.7% in less than 2.5 years!
The above questions are additionally pertinent because The Edge Financial Daily reported yesterday that “Land sale timely for Tadmax”. In the story, Dato’ Faizal admitted that the sale will ease the debt burden for the company which has only RM124,000 in cash reserves against borrowings of RM220.5 million as at September 2013. Tadmax is bleeding financially with a net loss of RM8.52 million on revenue of only RM3.55 million over the same period.
There are serious governance concerns over 1MDB’s real estate adventures, where it is given fedneral government land at massive discounts, while it funds richly valued private land acquisitions with debt. Given the history of Tadmax, its legal entanglements with the Government authorities and the state of its financial affairs, as well as the sudden increase in the valuation of the transacted land, 1MDB must immediately assure Malaysian tax-payers that this is not a bailout for Tadmax and its shareholders.