Ioi Properties Receives Proposal Ceo Jointly Develop Shenton House Singapore

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Jun 25, 2019 09:23 AMCLOSING, 4.47pm: KUALA LUMPUR (June 25): IOI Properties Group Bhd has received a proposal from its group chief executive officer (CEO) cum major shareholder Lee Yeow Seng to participate in the development of Shenton House, a commercial property located in Singapore that his private vehicle has successfully tendered for, for S$538 million (RM1.9 billion).According to a bourse filing, Yeow Seng has proposed that IOI Properties acquire all or part of his private vehicle, Shenton 101 Pte Ltd, which is planning to redevelop Shenton House, works for which are scheduled to start at the end of 2025.The aim of the proposal is to address and mitigate any potential conflict of interest that may arise due to Yeow Seng’s role in the redevelopment of Shenton House through Shenton 101, in which he is the sole shareholder. The intention is to align the interests of IOIPG with that of Shenton 101, which will hold the redeveloped property as an investment upon its successful redevelopment.Read also: Lee Yeow Seng of Malaysia’s IOI Properties Group to buy Shenton House for $538 milAdvertisementAccording to the filing, Yeow Seng has emphasized that Shenton 101 is fully ready and able to proceed with the development planning of Shenton House, and has already secured funding to enable it to move ahead with the redevelopment. The reason for extending the proposal to IOIPG is to help resolve or address any potential conflict of interest situation, the filing said.Yeow Seng and his brother Datuk Lee Yeow Chor are major shareholders of IOI Properties through their substantial shareholdings in Vertical Capacity Sdn Bhd, which holds 65.67% of the company’s stake.The sole bidder for Shenton House, Shenton 101, is a private vehicle owned by Yeow Seng. He previously stated that he felt it was more appropriate to bid for Shenton House through his private vehicle due to the size of the property and the tight timing set by the sales committee on the collective sale.Shenton House covers 3,377 square metres and is designated for commercial use, with a gross plot ratio (GPR) of 11.2. The property has a 44-year land lease, with the potential to be extended to a fresh 99-year lease.”Moreover, Shenton House is eligible for a 25% bonus gross floor area under Singapore’s central business district incentive scheme, which could allow for redevelopment into a mixed-use commercial and residential development or a hotel at a GPR of 14. As such, Shenton House has been earmarked for redevelopment into a fresh 99-year leasehold commercial development,” IOIPG said.The company said the current additional existing capital commitment, excluding development costs that are still to be finalised, is S$476 million, which includes land betterment premiums, lease top-up premiums, and transaction expenses,The purchase consideration for the proposed acquisition, according to Yeow Seng’s proposal, would be determined based on the actual cost of investment incurred by himself and Shenton 101, multiplied by the equity interest in Shenton 101 that IOIPG acquires, or an equivalent subscription value for the subscription of new shares in Shenton 101.”The intention of Yeow Seng is not to make a personal gain from this proposal. As such, the consideration includes various costs, such as the initial cost of investment in Shenton 101, the cost incurred by Shenton 101 for the acquisition of Shenton House, and upfront costs, including consultants’ fees, expenses, tender, application and approval costs, as well as the cost of finance,” IOIPG said.The proposed acquisition, according to the filing, is valid for a period of four months, which may be extended by an additional two months if IOIPG submits a written request.At market close on Tuesday, IOI Properties’ shares had dropped four sen or 1.75% to RM2.25, giving the company a valuation of RM12.39 billion.This article first appeared on The Edge Malaysia.