Oxley Holdings will complete asset enhancement initiative (AEI) works on Chevron House and expects to achieve final completion of the sale of the 32-storey Raffles Place commercial building no later than the first quarter of 2020.
It will also divest the retail and banking units “as soon as practicable, taking into consideration market conditions” but will do so before the final completion, the highly-geared developer said on Tuesday in response to Singapore Exchange queries.
Under the deal inked in late-April, buyer AEW, through its investment vehicle Golden Compass, will purchase the entire interest in Oxley Beryl, the Oxley subsidiary that owns Chevron House, and assume its existing bank loans for an aggregate value of up to S$1.025 billion.
Golden Compass is to pay S$210 million upon the first completion of the proposed sale, after which 82.35 per cent of the issued and paid-up capital of Oxley Beryl, among others, will be transferred to Golden Compass. The buyer is to then pay the balance of the consideration and discharge Oxley Beryl’s bank loans upon the final completion of the sale, after which the remaining shares in Oxley Beryl will be transferred to Golden Compass.
The final completion will take place after the March 1 works are completed and after the retail and banking units in Chevron House have been divested.
Oxley also said the “majority” of the costs for the AEI will be funded by bank loans to Oxley Beryl, which Golden Compass will discharge upon final completion, while the remainder are to be funded by the proceeds from the first completion.
It explained that the 82.35 per cent portion for the first part of the sale is S$210 million as a percentage of the total cost of Oxley’s investment in Oxley Beryl up to that point, estimated at S$255 million.
While Oxley previously said it relied on a formal valuation report dated June 30 last year, it said on Tuesday that it had obtained a valuation report on the basis of the AEI works being completed, dated March 12 2019, which indicated a value of S$1.025 billion. Oxley also said it took that report into consideration when deciding the consideration for the proposed sale.
The developer said that the expression of interest received from AEW had been unsolicited, and the group had decided to accept it after considering the prevailing conditions in the property market and that the unsolicited offer generally meets the group’s long-term investment objectives when it first bought Chevron House.
The retention sums will be held either in escrow accounts or in accounts jointly operated by the purchaser and the company.
When asked to disclose the remaining salient terms of the sale-and-purchase agreement (SPA), Oxley replied that all such terms of the SPA have been disclosed. It also said that it has declared all the key milestones between first and final completion.
Oxley closed at S$0.30 on Tuesday, down half a Singapore cent or 1.64 per cent before the announcement was made.