SUBSIDIARIES from SingHaiyi: 5H0 +1.49%, Chip Eng Seng: C29 0% and Hong Kong-listed Chuan Holdings on Friday jointly won the collective sale tender for Maxwell House at a price of S$276.8 million.
Maxwell House, a 13-storey commercial building located at 20 Maxwell Road, sits on a trapezoidal island plot with views from all four sides of the property. Built in 1971, it has a 99-year leasehold tenure starting from 1969.
The site is zoned for commercial use with a plot ratio of 4.3 under the Urban Redevelopment Authority’s (URA) Master Plan 2019.
The joint tenderers plan to seek approval from URA to redevelop the property into a mixed-use development. This development will have a gross plot ratio of at least 5.6 and gross floor area (GFA) of at least 21,746 square metres. Up to 20 per cent of the total GFA will be zoned for commercial use, SingHaiyi said in a bourse filing.
The joint tenderers are also seeking in-principle approval from the Singapore Land Authority to issue a fresh 99-year lease.
The completion of the acquisition is subject to URA’s outline planning permission for the rezoning, consent for the top-up in lease, a sale order approving the collective sale of all units in the property, as well as approval from the lessor of the property.
In April, appointed property consultant Cushman & Wakefield noted that URA had, in advice given on Sept 30, 2020, stated it will support a mixed-use commercial and residential development with the same gross plot ratio and GFA the joint tenderers are looking to have.
Wholly-owned subsidiaries of SingHaiyi, Chip Eng Seng and Chuan Holdings have entered into a binding memorandum of understanding (MOU). They will enter into a joint venture (JV) agreement that draws out the shareholding structure of the JV. (see amendment note)
CEL Development, the holding group for Chip Eng Seng’s property development business, will take the highest stake in the JV at 40 per cent, while SingHaiyi Investments and Chuan Investments will each take 30 per cent.
Chuan Investments is a newly incorporated company owned by Longlands Holding – a wholly-owned subsidiary of Chuan Holdings.
SingHaiyi Investments, CEL Development and Chuan Investments will pay the S$276.8 million purchase price according to their stakes in the JV. They will also contribute equity and other financial support to the JV in their respective proportions.
As Singapore billionaire couple Gordon Tang and Celine Tang are controlling shareholders of both SingHaiyi and Chip Eng Seng, the deal is considered an interested person transaction for both companies.
Together, the couple owns about 36.31 per cent of Chip Eng Seng’s shareholding and 65 per cent of SingHaiyi. Mrs Tang is also SingHaiyi’s group managing director, as well as Chip Eng Seng’s non-independent and non-executive director and non-executive chairman.
The audit committees of both SingHaiyi and Chip Eng Seng are of the view that the risks and rewards relating to the project are in proportion to the eventual equity of each joint tenderer.
They also hold the view that the terms of the MOU are on “normal commercial terms” and are not prejudicial to the interest of SingHaiyi and its minority shareholders.
Both companies said that shareholder approval for the deal is not required, as the risks and rewards for CEL Development and SingHaiyi Investments are in proportion to their respective shareholdings in the JV. Moreover, the interested persons do not have an interest in the project prior to the signing of the MOU.
In a separate statement on Friday, Chip Eng Seng said it is mindful that the prolonged impact of the Covid-19 pandemic may give rise to further market uncertainty and volatility. It believes it would be prudent to manage its financial and execution risks by partnering the other joint tenderers.
Chip Eng Seng noted that Chuan Investments’ shareholders collectively have a good mix of experience in property development and construction works in Singapore, something which is relevant to the redevelopment.
About one-third of Chuan Investments is owned by Tng Kay Lim. He is the founder and managing director of Kay Lim Holdings, a Singaporean property and construction group which also leases tower cranes.
Another one-third belongs to Yang Tse Pin, an entrepreneur who has set up companies whose core businesses include the operation and management of foreign workers’ dormitories, student hostel and facilities management. Mr Yang has more than three decades of property development and building construction experience, both companies said.
Shares of Chip Eng Seng closed up by half a Singapore cent, or 1.12 per cent, at S$0.45 on Friday, while SingHaiyi shed 0.1 cent, or 1.45 per cent, to 6.8 cents. Both companies are listed on the Singapore Exchange’s mainboard.
Amendment note: A previous version of this story incorrectly stated that the joint tenderers entered into the JV agreement when they in fact have not.
The Business Times