The price tag for The Verge is 40% lower than earlier aborted deal
PETALING JAYA: DRB-Hicom Bhd’s indirect unit, Hicom Megah Sdn Bhd, has managed to secure a buyer for The Verge commercial development in Singapore, but the price tag is 40% lower than the price indicated under an earlier aborted sale agreement.
In a filing with Bursa Malaysia yesterday, the conglomerate said Hicom Megah and the minority shareholders of Corwin Holding Pte Ltd, which owns the eight-level shopping mall plus an adjacent eight-storey building known collectively as The Verge, had inked a conditional share sale agreement to dispose of its 100% equity interest as well as 866,840 redeemable preference shares in Corwin to Singapore firm Columba Holdings Pte Ltd (CHPL).
The total sale consideration of the leasehold property at Serangoon Road is S$189.75mil (RM574.85mil), which is significantly lower than the S$317mil (RM960.35mil) initially sought from the previous potential buyer, Evolutyon Real Estate Investment Holding Pte Ltd.
The share sale agreement signed with Evolutyon last December was terminated in May this year due to Evolutyon’s inability to “fulfil its contractual obligations” on the agreed completion date, DRB-Hicom had announced then.
Subsequently, on Aug 3, Hicom Megah and Corwin’s minority shareholders – retailers Mohamed Mustafa & Samsuddin Co Pte Ltd and B.I. Distributors Pte Ltd, which own 5% each in Corwin – entered into a non-binding term sheet with Singapore-listed construction and property development firm Lum Chang Holdings Ltd (LCH).
The new buyer, CHPL, is a wholly owned subsidiary of Dorado Holdings Pte Ltd, which, in turn, is a 50:50 joint-venture between LCH’s unit Tucana Investments Pte Ltd and LAO V Serangoon Pte Ltd.
Hicom Megah’s investment in Corwin from 1997 until 2016 totals about RM224.94mil.
Its share (90%) of the net sales proceeds is about S$167.83mil (RM508.33mil) after deducting expenses.
The gain to the DRB-Hicom group is estimated to be about RM348.21mil if the disposal is completed by the third quarter of this financial year ending March 31, 2017. Under the earlier sale agreement that was cancelled, the expected gain was estimated at RM427.47mil.
According to DRB-Hicom, the market value of The Verge based on valuation performed by an independent valuer, Knight Frank Pte Ltd, without taking into account any potential redevelopment value is S$150mil (RM454.29mil).
“The consideration of S$189.75mil was arrived at on a willing buyer-willing seller basis determined based on the adjusted net tangible assets (NTA) of Corwin as at June 30 after incorporating the agreed market value of The Verge at S$273mil (RM826.75mil),” DRB-Hicom said.
It noted that the sale price would be adjusted if Corwin’s NTA based on the unaudited management accounts for the seven-month period ending Oct 31, 2016, was higher or lower by more than S$20,000 than Corwin’s NTA based on the unaudited management accounts for the three-month period ending June 30, 2016.