It may have to resort to bringing Malton Bhd to court if it is not able to renegotiate a fairer deal in their joint development agreement (JDA) involving a 60-acre plot of land in Bukit Jalil.

If an impasse occurs, a court settlement would seem the only way to resolve it because Ho Hup?s shareholders can?t block the JDA in an EGM, as the agreement does not involve the disposal of assets.

The JDA was entered into and announced by Ho Hup?s previous board led by Datuk Vincent Lye just a few hours before a March 17 2010 EGM that had Lye and the previous board ousted from the company.

Now, the new board of Ho Hup, led by ex-Kuala Lumpur mayor Tan Sri Kamaruzzaman Shariff, is trying to renegotiate the JDA. This is an important task for the new board because the 60 acres in question is Ho Hup?s last piece of land and is the PN17outfit?s only hope for revival.

Bukit Jalil Development Sdn Bhd (BJD), a 70%-owned subsidiary of Ho Hup, was to develop the land jointly with Pioneer Haven Sdn Bhd (PHSB), a wholly owned subsidiary of Malton.

It was agreed that PHSB would be solely responsible for the financing of the development, and that BJD would not fork out any money but would be entitled to at least RM265 million, or 17% share of the project?s gross development value, from Malton, over the various phases of the project.

The minimum entitlement of RM265 million reflects just the market value of the 60-acre land (at RM101.40 per sq ft). If Ho Hup were to sell the land outright, it could get the entire amount or even more in a one-time payment. But in the JDA, it would only get the amount in stages over the development period of say, 10 years? And where is the profit element from this deal? So how can this be fair to Ho Hup?

Ho Hup?s hopes now rested on Malton?s goodwill. The company hopes that Malton will do the right thing and renegotiate a deal that is fair to both parties. Give Ho Hup control of its assets so that it can chart its own destiny.

In order for Ho Hup to survive under its regularisation plan, it would have to resolve its cash flow problems and also look at its future businesses, which is property development and construction.

That plot of land is key to the PN17 company?s revival scheme under a so-called ?alternative? regularisation plan proposed by major shareholder Datuk Low Tuck Choy prior to the March 17 2010 EGM. The land is now tied to the JDA.

Meanwhile Ho Hup shareholders voted in favour to sell a 10.87-acre plot of land in Bukit Jalil to Magna Prima Bhd?s subsidiary Permata Juang (M) Sdn Bhd (PJSB) for RM19.41 million, or at RM41.01 psf.

There were higher offers for the land from three other tenders, namely Sagaharta Sdn Bhd, Jublex Sdn Bhd, and Ng Kee Leen, an executive director of Gamuda Bhd who is also the president of Master Builders Association Malaysia (MBAM). According to independent valuer Henry Butcher Malaysia, the said land was valued at RM45.01 psf, or RM21.30 million as at January 2010. The price agreed to with PJSB represents a discount of RM1.89 million or about 8.9% to the land?s current market value.

The company would examine the conditions set out in the sales and purchase agreement (S&P), ?as there are legal implications?. This is because the S&P was signed between the previous board and PJSB.

There was a delay in the submission of Ho Hup?s regularisation plans to Bursa Malaysia and the Securities Commission as the previous regularisation plans had taken into account the 60 acres of land, which was now tied to the JDA.

The company would apply to Bursa for another extension of the submission deadline after Ho Hup had applied for a three-month extension on Jan 22, 2010 to address its Practice Note 17 (PN17) status. The current deadline falls on April 4, 2010.

The JDA is a stumbling block for the company and in the meantime it hopes that the regulators would consider an extension.

It was seeking an extension from April 2 up to May 2 2010 to issue the circular to shareholders in relation to the proposed disposal of plot of land in Mukim Petaling measuring 13,398 sq m for RM7.64mil cash to Action Master Sdn Bhd. The planned disposal was first announced in December 2009.

Meanwhile the company has yet to appoint an executive to run the company. As it is, the company appears to have lost control of its most valuable asset, the 60-acre land in Bukit Jalil.