Newsbreak: Sale of Malaysian Bio-XCell’s facility to Biocon hits a snag

THE sale of a central utilities facility (CUF) and an eight-acre parcel owned by Malaysian Bio-XCell Sdn Bhd (MBIO) in Bio-XCell Biotechnology Park in Johor to Indian bio­pharmaceutical company Biocon Ltd has met with resistance from the federal government, sources say.

It is understood that the Ministry of Finance (MoF) had asked the Johor government to prevent the sale to Biocon.

The Edge had reported last July that Biocon had offered to buy the CUF and the eight-acre piece of land the facility sits on for RM25 million.

The sale was done via receiver and manager (R&M) AdamPrimus Chartered Accountants, which was appointed by Maybank Islamic Bhd in March, after MBIO became insolvent in February last year. MBIO had a RM130 million outstanding credit facility with Maybank Islamic secured against its assets, including land and the CUF.

It is understood that the CUF and the parcel of land are located within the 164.75-acre biotechnology park jointly owned by MoF Inc and UEM Sunrise Bhd via MBIO.

Records with the Johor Land and Mines Office show that the CUF land within the Bio-XCell Biotech Park is subject to certain restrictions in interest under the bumiputera classification. This prevents it from being sold, leased or transferred to a non-bumiputera person or entity “without the consent of the state authority”, a docu­ment dated Feb 13, 2020, that was sighted by The Edge shows.

The R&M is understood to have advertised for the sale of the assets in the press.

Aside from Biocon, a private Malaysian company had also submitted a proposal for the facility. The offer did not meet R&M’s criteria, however, as reported by The Edge last year.

Meanwhile, documents sighted by The Edge show that the MoF has requested that the Johor government “reconsider” the matter, given that a 100% bumiputera-owned company, Arcadia Acres Sdn Bhd, has expressed interest in buying the CUF.

The MoF and the Johor Menteri Besar did not respond to requests for confirmation. R&M AdamPrimus declined to comment when contacted.

The shareholders of Arcadia Acres are former Dagang NeXchange Bhd (DneX) board member Azman Karim (91.79%), Wan Zainal Abidin Abd Jalil (6.40%) and Wan Azryn Wan Ab Rashid (1.81%).

Arcadia Acres, which owns a 20.5% stake in DneX, is the operator of the CUF through its subsidiary Arcadia Energy Sdn Bhd. The firm is believed to be in talks with the Johor government to form a joint-venture company to buy the CUF and its land.

It is believed that the CUF, which provides industrial steam, chilled water and a centralised wastewater management system for the park’s tenants, is now operating at a loss, as it is underutilised.

So far, only two companies — Biocon and Pelangi Alternative Sdn Bhd — are using the CUF. The facility’s low utilisation rate has caused MBIO to bleed red ink since 2014 and largely contributed to its accumulated losses of RM207.36 million, based on the firm’s audited accounts for financial year 2017.

UEM Sunrise’s annual report for the financial year ended Dec 31, 2018, shows that MBIO recorded a net loss of RM27.83 million on revenue of RM16.95 million.

The total liabilities of MBIO for that year amounted to RM212.17 million, of which RM62.24 million was current. The company had net tangible assets of RM219.6 million, the report says.

Biocon had invested in Bio-XCell BioTech Park in October 2010. The Bangalore-based company had invested more than RM1 billion in its Iskandar Puteri, Johor plant — its first overseas manufacturing facility — since then.

Apart from the CUF, the Bio-XCell Biotech Park houses industrial and commercial buildings and has vacant land covering 50.03 acres, or 2.18 million sq ft, which are available for sale or long-term lease. So far, three foreign firms have expressed interest in investing in the park, which would help boost the utilisation rate of the CUF.

MBIO was set up in October 2009 for the development and operation of biotechnology parks in the 1,300-acre Southern Industrial and Logistics Cluster (SiLC) in Iskandar Puteri.

The company is owned by MoF Inc unit Biotechcorp Investment Holdings Sdn Bhd, with 60% equity interest, and UEM Sunrise, which holds 40%.

In 2017, MBIO slipped into financial difficulties after a long-term lease contract it had signed with another JV company between Sime Darby Bhd and US-based Verdezyne Inc did not pan out well. The contract was terminated after Verdezyne bailed out because of financial problems.