By The Star
Malaysian billionaire Tan Sri Quek Leng Chan, who is known for his savvy investment moves, is selling a property development project in Beijing – held under Singapore-listed GuocoLand Ltd – to a state-owned distressed asset management company in China for 10.5 billion yuan (RM6.79bil).
In a filing with the Singapore stock exchange, GuocoLand announced that its unit, GuocoLand (China) Ltd, had entered into an agreement with China Cinda Asset Management Co Ltd’s Beijing branch Office for the disposal of all the equity, contractual and loan interests of GuocoLand group in or relating to the integrated mixed-used development.
The Singapore-listed GuocoLand is 65.2%-owned by Hong Kong-listed Guoco Group Ltd. Both stocks were suspended yesterday. Quek controls 76.12% of the latter.
The mixed-used development project is located in the Dong Cheng district of Beijing City in China and has a useable area of 91,287.7 sq m for office, commercial, apartment and underground parking lot purposes.
According to the filing, the aggregate consideration for the transaction amounting to 10.5 billion yuan comprised 4,563,116,000 yuan for the project rights and 5,936,884,000 yuan for the project liabilities.
“The said consideration is arrived at on a willing buyer, willing seller basis after arms-length negotiations and will be satisfied wholly in cash with 9.45 billion yuan paid upon signing of the agreement, and the balance payable on the last day of the 18th month from the date of the agreement or dealt with in accordance with the tax provisions in the agreement, as the case may be,” GuocoLand said in the statement.
According to the company, the net book value of the project as at June 30, 2015 was about 8.46 billion yuan or S$1.72bil. The deal is expected to generate a net gain of about 1.58 billion yuan or S$480mil.
It added that the net proceeds from the transaction would be used for the general working capital (including repayment of debts) of the GuocoLand group, and was an opportunity to realise the capital value of the said project.
China Cinda, which is listed on the Hong Kong Stock Exchange, also made a filing with the city’s regulator on the Beijing real estate asset purchase.
China Cinda is an asset-management services company that invests, disposes and manages non-performing assets and equity.
According to its announcement, the project is planned for a mix of shopping centres, an office building with twin towers, apartments and hotels.
GuocoLand is a major property developer in Singapore with notable developments in China, Malaysia and Vietnam.
According to its website, it has invested an estimated US$3bil in China, with a sizeable land bank of completed and uncompleted properties amounting up to nearly 2.5 million sq m of gross floor area spanning across major cities like Beijing, Shanghai, Nanjing and Tianjin.
The company reported a 130% surge in its third-quarter net profit to S$49.5mil in the three months ended March 31, 2015.
Guoco shares were last traded at HK$86.60 (RM45.95) for a market capitalisation of HK28.49bil (RM15.12bil). GuocoLand shares, meanwhile, were traded at S$2.04 for a market cap of S$2.48bil (RM7.06bil).
Both stocks are part of the Hong Leong group, one of South-East Asia’s largest corporations.
Guoco Group holds a multitude of companies in the financial services sector, hospitality and leisure and gaming. Besides GuocoLand, it also has 66.5% in Guoco Leisure Ltd, which is also listed in Singapore, and a 25.4% stake in Bursa Malaysia-listed Hong Leong Financial Group Bhd (HLFG) and 65% in Guocoland (M) Bhd.
HLFG, in turn, has a direct 64.4% stake in Hong Leong Bank Bhd and 81.3% in Hong Leong Capital Bhd, among others.
Quek, who is Guoco chairman, had tried to privatise Guoco a few years ago but failed. This is despite him upping the offer price from the initial HK$88 in December 2012 to HK$100 in April 2013.
