Zelan unit to transfer two Wisma Zelan office suites to MMC Engineering Sdn Bhd to settle RM5.22m debt

KUALA LUMPUR (May 8): Zelan Bhd's wholly-owned subsidiary Zelan Holdings (M) Sdn Bhd (ZHSB) has entered into a debt settlement agreement with MMC Engineering Sdn Bhd to settle outstanding debts of RM5,219,415.21 via the transfer of two office units at Wisma Zelan in Bandar Tun Razak, Kuala Lumpur.

According to its Bursa announcement, the two leasehold strata office units — Suite 23-01 and Suite 23-18 on Level 23 of Wisma Zelan — each measure approximately 1,061 sq m and are valued at RM2.5 million each, for a total disposal consideration of RM5 million. 

Both units have a remaining leasehold tenure of approximately 65 years, expiring on July 23, 2090.

The disposal consideration will be satisfied via a set-off against the outstanding debt — upon successful registration of the property transfers to MMC Engineering Sdn Bhd — rather than a cash payment. 

Upon such registration, the RM5 million disposal consideration will be deemed as full and final settlement of the outstanding sum, with the remaining RM219,415.21 balance to be covered through monthly rental payments currently paid by MMC Engineering Sdn Bhd to ZHSB at RM67,710 per month.

The outstanding debt originated from engineering and related services previously rendered by MMC Engineering Sdn Bhd to Zelan Construction Sdn Bhd (ZCSB), another wholly-owned subsidiary of Zelan. 

The liability was subsequently novated from ZCSB to ZHSB under a debt novation agreement dated September 18, 2025.

MMC Engineering Sdn Bhd is a wholly-owned subsidiary of MMC Engineering Group Bhd, which is in turn a wholly-owned subsidiary of MMC Corp Bhd. 

As MMC Corp Bhd holds a 39.2% equity stake in Zelan, the proposed debt settlement constitutes a related party transaction under Chapter 10 of Bursa Malaysia's Main Market Listing Requirements. 

MMC Corp Bhd will accordingly abstain from voting on the resolution at the extraordinary general meeting (EGM) to be convened.

The proposed debt settlement is subject to shareholder approval at an EGM and forms part of Zelan's broader regularisation plan, which the company has been required to submit since being classified as a Practice Note 17 (PN17) issuer on April 30, 2023. 

Bursa Malaysia had granted Zelan a six-month extension until April 30, to submit its regularisation plan.

Zelan's proposed scheme of arrangement received unanimous creditor approval at a court-convened meeting on April 20, and is currently awaiting court sanction. The proposed debt settlement forms an integral component of the company's overall regularisation plan.

The board said the proposed settlement is in the best interest of the company, fair and reasonable, and not detrimental to non-interested shareholders. The audit committee concurred with this assessment.

The net book value of the two properties stood at RM2.7 million each as at Dec 31, 2025, against a market value of RM2.5 million each as appraised by IPC Island Property Consultants Sdn Bhd on April 30. 

The properties were originally acquired in February 1994 at a combined cost of approximately RM3.32 million.

The highest percentage ratio applicable to the proposed debt settlement is approximately 16.91%, based on the disposal consideration against Zelan's market capitalisation of RM29.57 million as at the latest practicable date.

The proposed debt settlement is expected to be completed within three months of obtaining the requisite regulatory and shareholder approvals.

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