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Chevron House, the prime office building in Raffles Place that is being sold by Oxley Holdings, has a market value of $787 million as at 30 June 2018, said the company on Thursday (9 May).
In response to a Singapore Exchange query, Oxley revealed that the disposal is expected to have a positive impact on the group’s earnings per share and net asset value for the financial year ending 30 June 2019.
“The profit on the transaction will be finalised and announced after the final completion.”
The property developer noted that its unit which owns the property, Oxley Beryl, has a net tangible asset value of $106.6 million and an enterprise value of $1.025 billion.
Under the April deal inked, Golden Compass, which is fully owned by US-based real estate fund AEW, would purchase the entire interest in Oxley Beryl as well as take over existing bank loans up to an aggregate value of $1.025 billion.
Golden Compass would pay an initial amount of $210 million upon first completion of the sale. Thereafter, the balance of the consideration shall be paid and discharge Oxley Beryl’s bank loans upon the final completion, which shall take place following completion of enhancement works on the property and the divestment of the property’s retail and banking units.
However, the acquisition is subject to certain adjustments in accordance with the terms of the SPA.
Meanwhile, the SPA “provides for certain retention sums which shall be released upon the fulfilment of relevant conditions”, said Oxley in April.
On Thursday, Oxley explained that the estimated amount of Oxley Beryl’s bank loans outstanding following the completion of the AEI works that the buyer is supposed to discharge on final completion of the sale is around $520 million.
An amount of $295 million will also be paid to Oxley upon final completion.
It added that the $295 million is subject to adjustments based on the AEI works, and divestment of the retail and banking units, as well as the deduction of a retention sum.
According to Oxley, if the actual construction costs for the AEI works are less than the agreed estimated amount, Oxley Beryl shall pay its parent company the savings on construction costs. But if the costs exceeds the estimated amount, then the parent company will pay the additional cost.
If the proceeds from the sale of the retail and banking units exceed the targeted amount, the excess up to an agreed amount will be used to defray costs to be incurred by the company, such as marketing costs, and any excess beyond the agreed amount will be shared equally between the purchaser and the company.
Should the sale proceeds be less than the target amount, the company shall bear the deficit.
The retention sum includes up to 10 percent of the office tower’s agreed value, to be “released within five business days after the issuance of certificate of statutory completion and separate subsidiary strata certificates of title in respect of all units in the property”, provided the purchaser shall be entitled to retain certain amounts as stated in the SPA.
It also includes “10 percent of the divestment value of the banking hall and retail units. This retention sum shall be released within five business days after Oxley Beryl’s receipt of the corresponding amounts retained by the buyer(s) of the banking hall and retail units”.
A first retention of $41.4 million less the cost paid by the company for the AEI works before the first completion, shall be released “within five business days from the date of issue of the temporary occupation permit in respect of the AEI works”.
On the salient terms of the divestment, Oxley stated that the process should be conducted by one or more rounds of expression of interest that is open to the public, which must be conducted by a reputable marketing agency, with commissions and fees borne by Oxley while the consideration to be received by Oxley Beryl in connection to the divestment should be in cash.
Meanwhile, the buyer will have the right to require Oxley to buy any or all of the units that remain unsold as at a long-stop date agreed by the purchaser and the company.
Fiona Ho, Digital Content Manager at PropertyGuru, edited this story. To contact her about this or other stories, email fiona@propertyguru.com.sg
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