Zelan Bhd, through its wholly-owned subsidiary Zelan Holdings (M) Sdn Bhd (ZHSB), has entered into a debt settlement agreement with MMC Engineering Sdn Bhd to resolve outstanding debts amounting to RM5.22 million. Instead of making a cash payment, the company will transfer ownership of two office units located at Wisma Zelan in Bandar Tun Razak, Kuala Lumpur.
The two leasehold strata office units — Suite 23-01 and Suite 23-18 on Level 23 — measure approximately 1,061 square metres each and carry a disposal value of RM2.5 million per unit, bringing the total consideration to RM5 million. Both units have around 65 years remaining on their lease tenure, which expires on July 23, 2090.
Under the agreement, the RM5 million property transfer will be offset against the outstanding debt once the ownership registration process is completed in favour of MMC Engineering. The remaining balance of RM219,415.21 will then be settled through monthly rental payments of RM67,710 currently paid by MMC Engineering to ZHSB.
The debt originated from engineering and related services previously provided by MMC Engineering to Zelan Construction Sdn Bhd (ZCSB), another wholly-owned subsidiary of Zelan. The liability was later transferred to ZHSB through a debt novation agreement signed on Sept 18, 2025.
The transaction is classified as a related party transaction because MMC Corp Bhd holds a 39.2% stake in Zelan. As a result, MMC Corp will abstain from voting during the extraordinary general meeting (EGM) to approve the proposal.
This proposed settlement forms part of Zelan’s wider regularisation plan after the company was classified as a PN17 issuer on April 30, 2023. Bursa Malaysia previously granted Zelan a six-month extension until April 30 to submit its regularisation plan.
Another key development is that Zelan’s proposed scheme of arrangement recently received unanimous support from creditors during a court-convened meeting on April 20 and is now awaiting court approval. The debt settlement is considered an important component of the company’s restructuring efforts.
The board and audit committee stated that the proposed settlement is fair, reasonable, and in the best interest of the company without negatively affecting non-interested shareholders.
Financially, the two properties had a net book value of RM2.7 million each as of Dec 31, 2025, slightly above their appraised market value of RM2.5 million each as assessed by IPC Island Property Consultants Sdn Bhd on April 30. The units were originally acquired in February 1994 for a combined cost of approximately RM3.32 million.
The transaction’s highest percentage ratio stands at about 16.91% when compared with Zelan’s market capitalisation of RM29.57 million. Completion of the debt settlement is expected within three months after obtaining all necessary shareholder and regulatory approvals.
Malaysia