Hotel Properties

Published June 23, 2007

Wheelock buys 10% stake in SC Global

$112.1m deal gives it exposure to local firms which get to hold land longer

By KALPANA RASHIWALA


WHEELOCK Properties (Singapore) continues to invest in other 'stylish developers' - this time, it has bought a 10 per cent stake in SC Global Developments. The stake was sold by SC Global chairman and chief executive officer Simon Cheong's Roveron Pte Ltd at $6 per share or $112.1 million. The counter ended unchanged at $6.45 yesterday.


A few good men: (from left) Wheelock CEO David Lawrence is banking on SC Global chairman and CEO Simon Cheong and HPL MD Ong Beng Seng

Yesterday's announcement comes after Mr Cheong earlier this week exercised 23 million SC Global warrants for $35 million. Mr Cheong's divestment of 18.68 million SC Global shares to Wheelock leaves him with a stake of about 51 per cent in the seven-year-old upscale residential developer.

Wheelock Properties CEO David Lawrence likened the group's latest investment in SC Global to its investment in March last year in Hotel Properties Ltd (HPL). Wheelock bought the 21 per cent stake in HPL from GuocoLand for $1.80 per share or a total sum of $171.4 million. Based on HPL's closing price of $6.15 yesterday, the value of that stake has gone up to $585.5 million.

'It's a bit like when we bought into HPL,' Mr Lawrence said in a telephone interview yesterday evening. 'We are looking for good, well-managed companies with a sense of style, a good brand name. That's what we like to invest in . . . and Simon's done very well and when the opportunity came to take a stake, we did. We are really investing in the people, like Ong Beng Seng (HPL's managing director) and Simon Cheong.

'So the main reason is the opportunity to invest in good people running good companies and it's quite difficult to do that at the moment because we can't find sizeable stakes in good companies . . . We have quite a bit to do (ourselves) as it is already.

'So rather than me busting my guts and overworking myself, it's good to have these guys to do some of the work for us!'

A further reason behind Wheelock's strategy of investing in local developers like SC Global and HPL is that it allows Wheelock - which as a foreign company is not allowed to hold on to land for long periods here - to gain exposure to firms that are allowed to do so, Mr Lawrence explains.

Asked if Wheelock was on the prowl for more such investments in Singapore, Mr Lawrence replied: 'I would love to but A, there aren't many people around like Ong Beng Seng or Simon Cheong and they are both great guys who've built good brands and good companies, and B, nobody wants to sell . . .'

Market observers say that an established upscale developer like Wheelock taking a stake in SC Global, is a resounding endorsement of its strategy.

Mr Lawrence also described Mr Cheong as having done a 'fantastic job, building a brand name and company in the last few years'. 'We like that and we want to invest in him, and 10 per cent is as much as we could get.'

There are no plans for now for Wheelock to embark on joint ventures with either HPL or SC Global, although the possibility remains if it makes commercial sense, Mr Lawrence reckons.

'We are not an interfering shareholder. We are not interested in taking over these companies. We're just interested in taking an investment. We don't want board seats but (just want to) let them get on with (the business). Both HPL and SC Global have good managements and good independent boards of directors.'

(15-04-2014, 12:31 PM)cif5000 Wrote:

(15-04-2014, 10:25 AM)Vseeker Wrote: At worse, it is status quo for Wheelock coz even at minimum 50% acceptance level, Wheelock's eff. stake in HPL will still be (40% * OFFEROR's 50%) = 20%

40% x 41.91% = 16.76%
vs. 20.16% original.

If acceptance is below 50%, the offer will lapse as it is a conditional offer. So wheelock will still keep its 20.16%, and not 16.76%. So no way wheelock's stake I hpl will be reduced.

Am I correct?

PUBLISHED APRIL 16, 2014

OBS, Wheelock offer $3.50-a-share for HPL
Market watchers suggest rival offer from Fu family could be in the offing

BYKALPANA RASHIWALA
kalpana@sph.com.sg @KalpanaBT


Mrongbengseng1604

Ong Beng Seng and Wheelock Properties yesterday jointly launched a $3.50-a-share cash offer for Hotel Properties Ltd (HPL) - PHOTO: SPH
application/pdf iCONTreasure trove: What HPL and Wheelock own along the Orchard belt
[SINGAPORE] Ong Beng Seng and Wheelock Properties yesterday jointly launched a $3.50-a-share cash offer for Hotel Properties Ltd (HPL), reviving market talk that the company would redevelop its substantive and adjacent assets along Orchard Road.
Announcing the offer on behalf of offer vehicle 68 Holdings, Standard Chartered Bank said 68 Holdings has agreed to buy almost 42 per cent of HPL for about $750 million from Mr Ong, his wife and his associates, and Wheelock, thus triggering a mandatory offer for the rest of the company.
Explaining the deal, 68 Holdings said: "OBS, as the co-founder of HPL, David Ban and Wheelock Singapore have been long-term shareholders of HPL and they share a common vision and strategy for HPL. They have therefore decided to consolidate their shareholdings in HPL so as to be in a position to cooperate and implement their shared objectives for HPL and to enhance value over time."
Yesterday's announcement said 68 Holdings has agreed to acquire 41.91 per cent of HPL, comprising 213.98 million shares at $3.50 each. Of this, 18.44 per cent is from Mr Ong and two companies controlled by him, Reef Holdings and Como Holdings, and 20.16 per cent from Nassim Developments. The remainder is from Mr Ong's wife, Christina; and David Ban and his wife, Pat; and Tan Zing Yan.
The offer vehicle is 60 per cent owned by Cuscaden Partners Pte Ltd and 40 per cent by Nassim Developments. Cuscaden, in turn, is 90 per cent owned by Mr Ong. Mr Ban owns the rest. Nassim Developments is an indirect wholly-owned subsidiary of Wheelock Properties (Singapore).
Mr Ong, who is managing director of HPL, had set up HPL with his late father-in-law, Peter Fu Yun Siak. Mrs Ong and her three sibilings Peter Fu Chong Cheng, David Fu Kuo Chen and Juanita Fu Su Ying have a deemed interest of about 21.7 per cent in HPL. Mr Peter Fu Chong Cheng has an additional stake of about 7.1 per cent deemed interest, taking his total stake to nearly 29 per cent.
Interestingly, apart from Mrs Ong, yesterday's announcement did not indicate whether 68 has received an undertaking from the Fus to accept the offer.
The offer will be conditional on the consortium securing more than 50 per cent of the company.
Yesterday, Wheelock was up 7 cents at $1.815. HPL rose to $3.53 from $3.13 last Friday. Trading was halted on Monday. Some 2.96 million shares changed hands. Although this is a sharp increase from last Friday's 77,000 shares, they represent just 0.6 per cent of the issued shares.
Market watchers said this could be a sign shareholders are waiting for the independent financial adviser's view. Or perhaps they believe a counter-offer could be made - from the Fu family that owns nearly 29 per cent of HPL. A clearer picture could emerge in the days and weeks ahead.
68 Holdings intends to retain HPL's listing; however, if the free float falls below 10 per cent, it will reassess its options.
Gaining majority control would make it easier for the consortium to realise HPL's potential. The announcement immediately revived talk of HPL eyeing redevelopment of its adjoining assets in Orchard Road - the Hilton and Four Seasons hotels, Forum the Shopping Mall and HPL House. There was previously even speculation that HPL could persuade the authorities to sell to it the Angullia public carpark next door for a bigger redevelopment. Wheelock Place, an office and retail property, is separated from HPL's assets by the Angullia carpark.
Since Wheelock bought a stake in HPL in 2006, speculation has been rife that Wheelock could partner HPL to redevelop HPL's Orchard Road assets.
Wheelock estimates the gain on disposal of its HPL shares at $40.15 million. Its total cost of the shares is understood to be about $1.86 per share.
Cuscaden Partners and Nassim Developments each has the right to require 68 Holdings to effect a pro-rata in-specie distribution of all its assets to its shareholders on or after the fifth anniversary of the close of offer. If a deadlock occurs, each of them will have the right to require 68 Holdings to effect a distribution in-specie of all its assets to its shareholders on a pro-rata basis.

"Market watchers said this could be a sign shareholders are waiting for the independent financial adviser's view. Or perhaps they believe a counter-offer could be made - from the Fu family that owns nearly 29 per cent of HPL. A clearer picture could emerge in the days and weeks ahead."

Since the Offeror intention is to keep listing, Fu family can participate in whatever upside WITHOUT being in any Offer.
So no incentive to counter-offer.

Since it is a Wheelock and Ong effort, it has something to do with redevt of that Orchard Road stretch. Fu family cannot unlock any value
without Wheelock help. The big car park is tumbling block. And Ong seems to be favoured by the Govt.

Surely the big car park has to be tendered out for wider participation, and not "given" to any preferred company?

(16-04-2014, 09:52 AM)thefarside Wrote: Surely the big car park has to be tendered out for wider participation, and not "given" to any preferred company?

Sure...can go for public tender....but the devil is always in the details...hahaha..

If tag some certain conditions e.g Proposed development should integrate with the surrounding buildings to enable a seamless retail experience...then only Wheelock, OBS, Bonvest and FEO can tender liao. Since Bonvest no lui to take up such a big project, only left W-O-F can tender..

http://www.onemap.sg/?SearchVal=WHEELOCK...,IJYcc_R,b

Ong Beng Seng may have to consider raising his stake. While we believe it is more likely there would be a redevelopment of prime assets, we do not rule out the possibility of a privatisation or an increase in stake by Mr. Ong Beng Seng to cement his position as a majority shareholder to avoid any shareholder fights as seen in the case of SC Global.

Wheelock’s position needs to unwind. SC Global’s force of hand to privatise may nudge Wheelock to take a more proactive approach towards its stake in HPL. Keen to avoid any hostile bids or complications in the future, this could be the reason behind Mr Ong’s open-market purchase of 2.2m shares at an average price of SGD3.17/share after Wheelock unavoidably accepted SC Global’s offer last December. If Wheelock starts to increase its stake, we could see movement ahead.


Privatisation Plays - Apr 2013
From Hot Buns to Beams of Steel
http://research.maybank-ib.com/pdf/docum...3_3870.pdf

(16-04-2014, 09:36 AM)opmi Wrote: Since the Offeror intention is to keep listing, Fu family can participate in whatever upside WITHOUT being in any Offer.
So no incentive to counter-offer.

Since it is a Wheelock and Ong effort, it has something to do with redevt of that Orchard Road stretch. Fu family cannot unlock any value
without Wheelock help. The big car park is tumbling block. And Ong seems to be favoured by the Govt.

The question is, will Fu sit still? He risks losing control of the family business when OBS teamed up with Wheelock. If it is for Orchard Rd, a JV with Wheelock will suffice, isn't it?

(16-04-2014, 10:16 AM)cif5000 Wrote:

(16-04-2014, 09:36 AM)opmi Wrote: Since the Offeror intention is to keep listing, Fu family can participate in whatever upside WITHOUT being in any Offer.
So no incentive to counter-offer.

Since it is a Wheelock and Ong effort, it has something to do with redevt of that Orchard Road stretch. Fu family cannot unlock any value
without Wheelock help. The big car park is tumbling block. And Ong seems to be favoured by the Govt.

The question is, will Fu sit still? He risks losing control of the family business when OBS teamed up with Wheelock. If it is for Orchard Rd, a JV with Wheelock will suffice, isn't it?

Already lose control already....OBS run the show...

Car Park is in the middle of HPL and Wheelock...

Fu family has deemed 29% stake and all it takes is another 1% to trigger another GO at a higher price. If Fu family has intention to get a better price for their stake, then they have to signal their intentions early.

Given that there are interesting assets in HPL, I m pretty sure that there are good solid funds out there willing to lend a helping hand.

OBS has been in a bidding war before and perhaps he could be on the defensive this time round just like the UE - S Trading duel for WBL.

Mr Mkt appears to be indicative of a imminent bidding war in HPL today.

Vested
GG