The cost of Komtar revitalisation project has risen substantially following modifications made last year to the original plan.
Only World Group Holdings Bhd (OWG) expects to complete the project to revitalise the 65-storey Komtar tower in Georgetown, Penang, in the second half of this year.
The food outlet and water amusement park operator had announced on Monday that it would use RM48mil from the estimated gross proceeds of up to RM50.17mil from a private placement exercise to fund part of the total expansion cost of Komtar.
On Wednesday, OWG gave further details to Bursa Malaysia on the revitalisation project that it clinched from the Penang Development Corp in December 2012 (prior to its listing in December 2014).
The Shah Alam-based company explained that the Komtar revitalisation project involved the proposed refurbishment and enhancement of five specific levels within Komtar leased to OWG – levels 5, 59, 60, 64 and 65, with a total built-up area of 130,333 sq ft - to create high end commercial space for retail, food and beverages and recreational purposes.
OWG was granted a 45-year lease, with the option to extend the lease for another 15 years.
“Subsequently in 2015, additional floor (level 66) and new spaces (levels 3, 4 ,5 and 6) were added to the project which would at least double the total built-up area,” it said.
On Jan 18 when it announced the private placement, OWG gave the total expansion cost for the Komtar revitalisation project as RM180mil, substantially higher than the amount given in its initial public offering (IPO) prospectus. The remaining cost of the project, which is expected to turn Komtar into an integrated tourism destination, would be funded via internally generated funds and bank borrowings, it said.
In its prospectus dated Nov 26, 2014, OWG had said the revitalisation project would cost RM60mil and that it would use 60.44% (RM30mil) of its IPO proceeds to partially fund the project. According to the document, the project was scheduled for completion in the third quarter of 2015.
OWG shares lost 14 sen to close at RM2.39 on Wednesday. - By The Star