Members concerned over sale of AAM HQ
> Sale price, lease-back agreement and appointment of agent among issues
MEMBERS’ concern over the sale of the headquarters of the Automobile Association of Malaysia (AAM) appears to be justified.
It is just one of the last properties the AAM owns.
While the sale may be justified on the basis that the money could solve its ongoing cash-flow problems, the whole process of this transaction raises a cloud of suspicion.
Even before members can approve its sale at the special general meeting (SGM) set for Oct 3, news has emerged that the deal has already been finalised and that the earnest money of 10% of the sale price of RM7.5 million has been received by AAM. The only resolution the SGM seeks is for members to authorise the trustees and/or the association to execute all documents as may be necessary to effect the said sale to fulfil its obligations under the sale-and-purchase agreement.
However, as early as May 3, AAM vice-chairman Wan Zaharuddin Wan Ahmad, had already offered the property for sale to WWRC Holdings Sdn Bhd, a chemical solutions company with Singaporean and Taiwanese directors. That’s not all. It has also entered into a lease-back agreement with the buyers for 12 years with the total rental amounting to RM5.85 million. The leaseback arrangement guarantees the purchaser a 12-year rental return ranging from 5 to 8% per annum.
So, after that period, the net gain for AAM would have been RM1.85 million without having ownership of the building.
Six days after the offer letter was sent, Wan Zaharuddin sent a letter of appointment to a chartered architect, Yong Sow Wai, to act as marketing agent for the sale. “If the alleged sale had already been negotiated and an offer letter already made, why appoint a marketing agent?” asked one member.
Other members claim that the building is being sold at below the prevailing market price. AAM, in its own documents, revealed that the property – 10 shop lot units opposite the Sultan Abdul Aziz Shah Golf Club – was valued at a much higher price.
Raine & Horne International Zaki and partners put the price at RM8.6 million. Rahim & Co International valued it at RM7.7 million.
It is not known if the sale was made through an agent or through a tender exercise, but the committee in its minutes noted that the “best offer” was RM7.5 million.
We contacted both Wan Zaharuddin and AAM chairman Tengku Mudzafar Tengku Mustapha last week for comments.
We were subsequently contacted by AAM’s solicitors to provide answers.
However, the solicitors could not provide the answers sought and a partner of the legal firm replied: “Your queries are not all legal in nature. I can respond easily to the legal aspects but (some) questions are not within my purview and I have to seek instructions on that.”
Excerpts of the letters sent to the architect and WWRC Holdings.