South Africa Baralink Project

KumSioJui SG

In recent months we have seen a rise in the number "reverse takeovers" of "burnt out" companies being injected with new assets or once taken over are seen diversifying out into newer businesses. In the news over the last few weeks are construction companies like Lian Beng, Leong Hin and most recently neocorp being taken over and re-inventing itself.

And as SGX recently announced that it would start to tighten requirements for "new company listings" to protect minority investors, we shall no doubt see more and more of such "back door" listings taking place in the near future.

One such "back door" listing occured sometime back is Malaysia's private developer Safuan Group gaining control over mediastream an unprofitable music records company which is listed on the sesdaq.

Mediastream, which has been unprofitable for at least six years, would issue new shares to Safuan in payment for the stake in the South African project, Mediastream said in a statement. Its loss narrowed to S$2.09mil in the year ended December 2003 from S$18.8mil in the previous year.

Safuan would in turn sell its 70% stake in the Baralink development in Johannesburg to Mediastream, for S$85mil and in return, it will get 84% of the Singapore company.

This will be Safuan's second attempt to gain control of a publicly traded company. The company had earlier abandoned plans to acquire a stake in Promet Bhd thru a similiar "back door" listing after certain conditions imposed by the securities regulator could not be met but it also partly stems from existing capital controls still currently enforced in malaysia.

Safuan will ask Singapore authorities to waive a requirement for it to make an offer for the rest of the shares in Mediastream. Buying more than 30% of a Singapore company triggers a rule requiring the buyer to offer to buy the rest of the company.

For the baralink project Safuan would partner Jurong International, a unit of state-owned JTC Corp, Singapore's biggest industrial landlord, in managing the South African project.

The development would have 12,641 homes and shops in Johannesburg and may generate US$450mil in sales over six years.

source - Bloomberg

KumSioJui SG

Safuan gains base in Singapore

SAFUAN Group Bhd will shift its share of a South African housing project into Mediastream Ltd, gaining control of a Singapore publicly traded company for the first time.

Safuan would sell its 70% stake in the Baralink development in Johannesburg to Mediastream, an unprofitable maker of music records, for S$85mil, Safuan chairman Datuk Mat Shah Safuan said. In return, it will get 84% of the Singapore company.

The transaction may make it easier for Safuan to raise funds from Singapore, bypassing Malaysian rules that stemmed from the imposition of capital controls in 1998.

Mediastream, which has been unprofitable for at least six years, would issue new shares to Safuan in payment for the stake in the South African project, Mediastream said in a statement. Its loss narrowed to S$2.09mil in the year ended December 2003 from S$18.8mil in the previous year.

Safuan's plan will be its second attempt in three years to gain control of a publicly traded company. In 2001, the company abandoned plans to acquire a stake in Promet Bhd after certain conditions imposed by the securities regulator could not be met.

This is our first inroad into Singapore, which we will use as a base for our international projects, Mat Shah said in an interview in Kuala Lumpur.

The relationship between Malaysia and Singapore is getting better and there shouldn't be any barriers. There is a lot of experience in Singapore in terms of technical and financial back-up.

Safuan will ask Singapore authorities to waive a requirement for it to make an offer for the rest of the shares in Mediastream. Buying more than 30% of a Singapore company triggers a rule requiring the buyer to offer to buy the rest of the company.

The plan would help diversify the business activities of Mediastream and broaden the earnings base of the company, Mediastream said. Still, the South African housing project has yet to record any sales or earnings and completion of the acquisition would not have a material impact on its earnings.

Safuan would, meanwhile, partner Jurong International, a unit of state-owned JTC Corp, Singapore's biggest industrial landlord, in managing the South African project, Mat Shah said.

The development would have 12,641 homes and shops in Johannesburg and may generate US$450mil in sales over six years, he said. Bloomberg

Story from this website

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Massive project will lead to the rise of the south
August 20, 2003
From south-africa official website

SOWETO(acroynm for South West Township) - a township of contrasting images from sprawling, poverty-stricken wasteland to a cosmopolitan, vibrant locale - is to be reinvented into a viable centre of cultural and commercial activity.

Parts of the township are set to undergo a major facelift as the much heralded but long-delayed Baralink project finally gets underway, with work beginning on the upgrading of the Baragwanath taxi rank along the Old Potchefstroom Road.

The development, which has been 10 years in the making, promises to turn the Baragwanath Precinct into a major commercial hub, complete with shopping malls and mixed-income residential areas.

Parks Tau, councillor responsible for Development Planning, Transportation and Environment in the City of Johannesburg, ascribes the delay to the sheer magnitude of the project and the technicalities involved. "It is a massive project which had to go through various processes and involved many role players. We received numerous proposals from the private sector and had to adjudicate on the viability of the proposals. The response from developers has been overwhelming."

But Tau is confident the project is now set to take off. "We experienced some hiccups along the way, but the project is definitely gaining momentum. I'm fairly confident we are beginning to see progress. The project needed a catalyst of sorts." This catalyst has come in the form of the taxi rank development, Tau says.

The major advantage of the area covered by Baralink is it is "situated on the main thoroughfare, Old Potchefstroom Road, two kilometres from the Western bypass, with easy access to the Johannesburg freeway grid, close to massive taxi ranks, adjacent to the Nancefield railway station, near the hospital and police station, and with very high visibility", according to a council report.

Soweto is an area with a huge buying power, yet historically it has been removed from economic developments. This project will link Soweto to the city centre and, for Tau, will be a catalyst in "dispelling the myth that you can't have commercial activity in Soweto. The area is home to a third of Joburg residents you know."

The programme underscores the City's desire to redress the skewed development of Joburg, which has seen resources being pumped into the northern suburbs at the expense of the south, Tau says. "We are passionate about this project. We want to see Soweto becoming a centre of commercial activity."

Punted as "the gateway to Soweto", the area currently boasts a massive public transport interchange node, a disused power station, an under-utilised dam, an informal settlement, hordes of informal traders, a university and three hospitals.

Initiated in 1994, the Baralink Development Framework is an ambitious and comprehensive plan to utilise the vast tracts of land surrounding the Chris Hani Baragwanath Hospital.

The programme proposes the upgrading of the Baragwanath taxi rank, the clearing of the nearby informal settlement, the provision of mixed-income housing, developing open spaces, and putting the nearby Orlando Power Station to productive use.

"This is a multi-billion rand project which includes the provision of infrastructure, sewer, bulk electricity and reticulation," explains William Bila, assistant Director for the greater Soweto area and project coordinator. "It is mostly driven by the private sector and the City will mainly provide the necessary infrastructure and impetus to attract investment."

The area covered by Baralink has now been demarcated into 15 land parcels, earmarked for different types of developments, says Bila.

The nucleus of the development will be the Orlando Dam Precinct, a site "comprising 41 hectares, with appropriate space for building all the centre's facilities without compromise to the environment", says Bila. To the south are a further 30 hectares of undeveloped Council-owned land available for future expansion.

Recent developments suggest that plan is at last taking off, albeit in fits and starts. These include:

* The establishment of a "steering committee" to coordinate the Baralink
developments

* The current work being done on realigning Potchefstroom Road towards
the hospital and the upgrading of the taxi rank

*The City is in the process of buying the Putco bus depot. The depot will be used to house Region 10 offices and as a "point of entry" for visitors to Soweto

*The work being done on rehabilitating the Klipriver wetlands

*The preservation of the Vista Koppies, the area between the university and the teachers college, reputed to have indigenous plants with medicinal properties

*The building of a satellite Fresh Produce Market

*The rehabilitation of the sewer treatment works in the south of the project area to link up the Orlando Dam, Vista Koppies and Kliptown golf course to form a comprehensive open space system

But the flagship of the development, which is expected to alter the landscape and ambience of the area, will be the shopping mall and penthouses around Power Park, to be undertaken by African Professional Consortium (APC). The R500-million project will be developed over five years, with the first phase to be completed within 18 months, says Peter Malefane, architect and head of the consortium.

According to Malefane, APC has already conducted market research and lined up tenants for the housing units. The company is only waiting for the site to be proclaimed a township before construction begins.

The complex will be unique among shopping malls. "It will be a meeting place where people engage in social activities, including sport, music festivals and open air theatre. It will offer a lot more than shops," Malefane explains. Targeted at the middle-class, the upmarket complex will be designed to be visually attractive.

Malefane describes Soweto as an area "with a tourism vibe, but it is under-designed to cater for the tourism market". But APC hopes to draw the upwardly mobile professionals back to the township. "Our plan is to build a shopping complex, a museum and an open auditorium linked to the Orlando Dam," Malefane explains. "We will also convert one of the power station towers into a convention centre."

The second phase of the project will consist of light industry development, rental housing, offices, hotels, a convention centre, an entertainment resort and an IT harbour.

Malefane expresses regret that many politicians had moved out of the township. "Had they stayed, their presence would have accelerated development."

Contracts have also been awarded to Thebe Housing and Safuan to build houses in the area. People currently staying at the nearby Elias Motsoaledi informal settlement will be relocated to make way for this development.

Thabo Maisela, manager of strategic support for the City's Region 10, says the local community is constantly informed about developments. "We strive to consult the community on an ongoing basis through ward committees which call public meetings to give feedback. We have also been consulting with hawkers from the Baragwanath taxi rank and with residents of Elias Motsoaledi informal settlement."

The Baralink Project is also designed to benefit empowerment companies. Apart from the major contractors, all of whom boast strong empowerment credentials, the projects are expected to benefit locals by providing jobs for smaller local companies and individuals.

Baralink promises to be more than just another development programme. Even as the first bricks are being laid, ideas keep streaming in. "The FNB Stadium offers an opportunity for developing activity around sports. The 2010 bid committee has indicated they are keen in establishing the FNB as a catalyst for developing the area around the stadium," Maisela reveals.

The success of the programme will be considered by many to be a vindication of the public-private partnership.