(Reuters) - A consortium that includes Singapore tycoon Ong Beng Seng and Wheelock Properties (Singapore) Ltd (WPSL.SI) offered on Tuesday to buy Hotel Properties Ltd (HPPS.SI) for S$3.50 per share, valuing the company at around S$1.8 billion ($1.4 billion).
The move is the latest in a string of acquisitions in Singapore by large shareholders seeking to take advantage of what they see as attractive valuations to gain full control of property assets.
68 Holdings Pte Ltd had agreed to acquire nearly 214 million shares in Hotel Properties, representing a 41.9 percent stake in the company, at S$3.50 each, according to stock filings from Hotel Properties and Wheelock Properties to the Singapore Exchange. The group plans to make a cash offer for all the remaining shares it does not own.
Shares of Hotel Properties surged as much as 13.1 percent to S$3.54, their highest point in almost 11 months, while Wheelock Properties jumped 5.4 percent to S$1.84 in early Singapore trading.
68 Holdings is 60-percent owned by Cuscaden Partners Pte Ltd, an investment holding company in which Ong, who is also managing director of Hotel Properties, owns a 90 percent interest and David Ban Song Long owns the rest.
The remaining 40 percent of 68 Holdings is held by Nassim Developments, a unit of Wheelock Properties. Wheelock Properties is part of Hong Kong-listed Wheelock & Co Ltd (0020.HK).
Ong, Ban and Wheelock have been long-term shareholders of Hotel Properties and have decided to consolidate their shareholding so they can "implement their shared objectives for HPL and to enhance value over time," according to the filing.
Hotel Properties owns and operates hotels, and has businesses in property development and investment holding. The company has a portfolio of 28 hotels and resorts spread across 13 countries, according to its website.
The Hotel Properties offer comes a day after CapitaLand Ltd (CATL.SI), Southeast Asia's biggest property developer, said it had bid S$3.06 billion ($2.45 billion) to buy out minority shareholders in its 65-percent owned CapitaMalls Asia Ltd (CMAL.SI).
Below extracted (in italics) from Wheelock's announcement on 15-Apr2014... on the "Consortium Arrangements"
=> Wheelock's existing 102.948m HPL shrs @$3.50 each => worth exactly $360.318m !, so Wheelock dun have to come out any monies for its part of the shrhldr loan !!!
=> ref below items (see items v, viii & ix)
they even have in place a "5 Years" timeline to achieve certain objectives (probably related to the "reserved matters")...else they're prepared to part ways again via a DIS.
=> Consortium partners dun seem "v. trusting" of each other either !, so there are below (items vi, vii) in place.. hahaha
A3.2 Consortium Arrangements
The Consortium Parties have also entered into the Investors’ Agreement with the Offeror, setting out the terms of the Consortium, including the following:
(i) each of Cuscaden and Nassim Developments has agreed to make a subordinated shareholder loan to the Offeror of S$540,477,000 and S$360,318,000 respectively (collectively, the “Shareholder Loans”);
(ii) the Offeror will utilise the Shareholder Loans to pay for the acquisition of the Sale Shares, which shall include the acquisition of 102,948,000 HPL Shares (“Nassim Sale Shares”), representing approximately 20.16 per cent. of the HPL Shares in issue, from Nassim Developments;
(iii) the Consortium Parties shall be entitled to appoint a specified number of representatives to the board of Offeror. As at the date of this Announcement, the board of directors of the Offeror comprises Mr Ong Beng Seng, Mr David Ban Song Long, Mr Stephen Tin Hoi Ng and Ms Tan Bee Kim. Mr Stephen Tin Hoi Ng and Ms Tan Bee Kim are the Chairman and Senior Executive Director of the Company respectively;
(iv) subject to certain conditions, the proposed transfer(s) of the shares of the Offeror by either of the Consortium Parties is / are subject to pre-emptive and tag-along rights;
(v) on or after the fifth anniversary of the date of close of the Offer (or such other date to be agreed between the Consortium Parties), following the settlement of all liabilities of the Offeror (if any), each Consortium Party shall have the right to require the Offeror to effect a distribution in specie of all its assets to its shareholders on a pro-rata basis;
(vi) Nassim Developments shall have an option to require Cuscaden to acquire all its Offeror Shares, such option only being exercisable in the event that Cuscaden, the Offeror or parties acting in concert with it (other than Nassim Developments and/or its affiliates, but excluding the Offeror) elects to make a subsequent offer to acquire any remaining HPL Shares;
(vii) Cuscaden shall also have an option to require Nassim Developments to acquire all its Offeror Shares, such option only being exercisable in the event that Nassim Developments and/or parties acting in concert with it (other than the Offeror and Cuscaden and/or its affiliates) elects to make a subsequent offer to acquire any remaining HPL Shares;
(viii) the Consortium Parties have agreed upon a list of reserved matters (“Reserved Matters”) which shall not be undertaken except with the unanimous approval of the Consortium Parties; and
(ix) in the event that the Consortium Parties, acting reasonably and in good faith, are not able to agree on any Reserved Matters within the requisite timeframe, a deadlock will have occurred and each of the Consortium Parties shall have the right to require the Offeror to effect, following the settlement of all liabilities of the Offeror (if any), a distribution in specie of all its assets to its shareholders on a pro-rata basis ]
Wheelock Properties' P/B is 0.74, but its parent company Wheelock and Co listed in HKEX has a P/B of 0.4. Isn't Wheelock and Co a better buy? Any thoughts?
From my old memories, Wheelock is owned by shipping tycoon YK Pao. It is quite obvious that being so well off, the entire group takes its own sweet time to create value.
While many are hoping that Wheelock Properties will eventually be privatised, the wait can be forever since the parent company is already in firm control. I personally view the situation here to be no different to that of UIC-Singland- not that it will not happen but substantial holder has show little intention over the years to make open market purchase of Wheelock Properties shares, hence the wait can be even longer than that of Singland.
(20-04-2014, 02:53 PM)orangetea Wrote: The parent has mostly remain 0.4x below book
Question is why did it still remain that way so long.
A valuetrap?
At least wheelock (singapore) has possibility of delisting which is some sort of catalyst.
Holding it in sgd sure beats holding hkd unless one has use for hkd or is a frequent holder of hk counters to deploy it.
I think the main reasons are the cooling measure in HK and slowdown in China. Most property counters in HK are trading at a significant discount to BV.
BTW, thanks for the FT Mkt screenshot. Didn't realize that such info are available FOC.
(20-04-2014, 05:51 PM)greengiraffe Wrote: From my old memories, Wheelock is owned by shipping tycoon YK Pao. It is quite obvious that being so well off, the entire group takes its own sweet time to create value.
Sir YK handed over to his son-in-law Peter Woo who just passed the chairmanship to his son Douglas at the beginning of the year.
(20-04-2014, 05:51 PM)greengiraffe Wrote: From my old memories, Wheelock is owned by shipping tycoon YK Pao. It is quite obvious that being so well off, the entire group takes its own sweet time to create value.
While many are hoping that Wheelock Properties will eventually be privatised, the wait can be forever since the parent company is already in firm control. I personally view the situation here to be no different to that of UIC-Singland- not that it will not happen but substantial holder has show little intention over the years to make open market purchase of Wheelock Properties shares, hence the wait can be even longer than that of Singland.
Odd Lots
Vested
GG
It was Wheelock Marden, controlled by the Bristish until a hostile take over between WK Pao and the late KhooTeck Phut of Goodwood group in 1985. Pao won the counter biding , but Khoo walked away with a tidy USD40 millions windfall.
Present Chairman Peter Woo married one of the 4 daughters of Pao and took charge of the property division till today.
Lower prices at Panorama relaunch tomorrow
Agents say prices could be 14% lower than at January's initial launch
PUBLISHED ON MAY 10, 2014 1:11 AM
The crowd at The Panorama's showflat on the first day of the official launch of the 698-unit project by Wheelock Properties on Jan 19. The 99-year leasehold project in Ang Mo Kio will be relaunched tomorrow. -- ST FILE PHOTO
BY MELISSA TAN
THE Panorama condominium in Ang Mo Kio goes back on sale tomorrow at a discount, the latest in a recent string of relaunches.
The new prices could be up to 14 per cent lower than at the initial launch in January, according to marketing agents.
Consultants said more projects could be put back on the market at lower prices in the coming months as some developers may have to sell units to pay for the project's construction.
Developers may also be encouraged to do so because recent condo repricings by their rivals have managed to move a decent number of units, they noted.
At The Panorama's relaunch tomorrow, prices for a one-bedder could start at $565,000 in total, according to marketing agents.
This is about 14 per cent below the lowest price paid for the smallest one-bedder in January - $658,670 for a 431 sq ft unit.
A two-bedder could start at $820,000 and a three-bedder $1,175,000. New prices for larger units such as four- and five-bedders and penthouses were not advertised.
The new prices work out to a range of $1,100 to $1,310 per sq ft (psf), lower than the previous average of $1,366 psf, according to caveats lodged with the Urban Redevelopment Authority (URA).
The 99-year leasehold project has sold poorly, partly because home loan curbs set last year have made it tough for buyers to afford more expensive units.
The developer, Wheelock Properties, moved 58 units in January at a median price of $1,343 per sq ft - just 8 per cent of the 698 units available. It had sold only 57 units in total by end-March, going by the latest available URA data, indicating that some units had been returned by their buyers.
Wheelock said in its first-quarter results yesterday that it had sold 56 units at $1,365 psf. It did not specify the average price.
The slow take-up had prompted Wheelock to write off $110 million for the project, which sent it into the red for the three months to Dec 31 last year.
Wheelock had paid $550 million for the land in Ang Mo Kio Avenue 2, which works out to $790 psf per plot ratio (ppr) for the nearly 1.85ha site - far higher than the $560 and $650 psf ppr analysts had expected.
Consultants yesterday said more condo relaunches could be on the horizon, with likely candidates being projects that have moved fewer than half their units.
"Developers generally need to get some cashflow so they don't have to dig into their own pockets to carry on the development," said CBRE research head Desmond Sim. But he noted that the threshold at which developers would need this extra cash depends on their profit margins from the project and the complexity of the construction.
OrangeTee research head Christine Li said "very good results" from recent condo repricings may also entice other developers to relaunch their projects.
The 75-unit freehold Hallmark Residences in Bukit Timah, for instance, managed to sell 26 units in February and a further 13 in March after its developer, MCL Land, cut prices.
CapitaLand's 509-unit Sky Habitat project in Bishan sold 80 units the day it relaunched last month, at prices about 10 to 15 per cent lower than at its initial launch two years ago.
Projects launched last year that have sold fewer than half of their units so far include Hillion Residences in Bukit Panjang, Kingsford's Hillview Peak in Bukit Batok, Vue 8 Residence in Pasir Ris and The Glades in Tanah Merah.
melissat@sph.com.sg
BACKGROUND STORY
WHAT AGENTS SAY
New prices at The Panorama could be up to 14 per cent lower than at the initial launch in January
A one-bedder could start from $565,000
A two-bedder could start from $820,000
A three-bedder could start from $1,175,000
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