Malaysia's 1MDB to sell stake in property project stake to China-Malaysia consortium

File photo of traffic passing a 1Malaysia Development Berhad (1MDB) billboard in Kuala Lumpur.
File photo of traffic passing a 1Malaysia Development Berhad (1MDB) billboard in Kuala Lumpur.PHOTO: REUTERS

KUALA LUMPUR (REUTERS/THE STAR/ASIA NEWS NETWORK) - Malaysia's troubled state fund 1Malaysia Development Berhad (1MDB) has agreed to sell its majority stake in a high-profile property development project to a consortium including China's state-owned China Railway Engineering Corporation (CREC), according to a copy of the contract seen by Reuters on Thursday (Dec 31).

The buyer, a consortium known as IWH-CREC Sdn Bhd, is a 60:40 joint venture between Iskandar Waterfront Holdings (IWH) and CREC.

Debt-laden 1MDB is selling its 60 per cent holding in Bandar Malaysia Berhad, which is developing a 197ha air force base in Kuala Lumpur into the city's public transport hub.

1MDB is scheduled to announce the sale later on Thursday.

A press release issued by 1MDB before the start of the ceremony this morning said that the agreement marked the final milestone in the 1MDB rationalisation plan as presented to the Cabinet on May 29.

The agreement follows from the execution of the Binding Term Sheet with IPIC in June 2015 and the Share Sale and Purchase Agreement with CGN Group last month.

The statement said that the IWH-CREC Consortium has valued the Bandar Malaysia land situated in Sungai Besi at RM12.35 billion (S$4 billion).

"Accordingly, its 60 per cent share will cost RM7.41 billion. 1MDB will receive a 10 per cent deposit of RM741 million upon execution of the Share Sale and Purchase Agreement, with completion of the transaction expected by end June 2016."