TUAN Sing Holdings, which is looking to divest its hotel assets, is seeking a stake in Katong Mall, which was put up for collective sale last week.
In a statement released over the weekend, Tuan Sing said that it is looking to dispose of $107 million in loans it had extended to its associate Gul Technologies Singapore (Gul Tech) through an asset swap with the controlling shareholders of Tuan Sing for certain strata units in Katong Mall.
The asset swap will involve 129 strata shop units at Katong Mall with an aggregate purchase consideration of about $63.1 million. This was arrived at based on the aggregate value of the properties of $130.1 million, representing 70 per cent of the open market value of Katong Mall, but less outstanding borrowings of $66 million and rental deposits and advance rental of about $1 million, which will be retained by the vendors.
The purchase consideration will be satisfied by Tuan Sing and certain of its subsidiaries novating the Gul Tech loans in favour of the vendors of the Katong Mall units, which are companies under the controlling shareholders of Tuan Sing. This is subject to a $44 million loan waiver by the controlling shareholders.
Tuan Sing said that the proposed assets swap would be beneficial as it allows the company to secure a 'realistic and tangible recovery of the loans, albeit that Tuan Sing would have to recognise a partial write-down of the loans'.
It will also transform Gul Tech's equity from a negative to a positive net asset position with the controlling shareholders waiving about $44 million of the loans.
Tuan Sing said that it had already made provisions for the loans in prior years, and estimated that the net effect of the partial writedown on equity is about $0.7 million.
The company also said that it planned to dispose of its 50 per cent held hotel assets worth about A$615 million (S$799 million) to third parties as and when opportunities arise.
Tuan Sing will hold two separate extraordinary general meetings on June 16, 2008, to seek shareholders' mandate for the two transactions.
This article was first published in The Business Times on Jun 2, 2008
