SINGAPORE (THE BUSINESS TIMES) - Lian Beng Group has asked for more time to dispose of competing business in relation to its unit SLB Development, both the mainboard-listed construction firm and Catalist-listed SLB announced on Friday night (May 22).
The Singapore Exchange said it has no objections to granting an extension, subject to SLB announcing the extended deadline and the rationale for seeking an extension, Lian Beng's plans to fulfil the disposal by the new deadline, and the audit committee's views on whether the extension will be prejudicial to SLB and its minority shareholders.
Before SLB was listed in 2018, Lian Beng's business had included property development. To mitigate potential conflicts of interest with SLB post-listing, Lian Beng had voluntarily undertaken to dispose of three properties in Australia and wind up or liquidate two companies.
This was meant to be done within 12 months of SLB's listing date in April 2018. In April 2019, Lian Beng was granted a one-year extension till April 19, 2020, as unfavourable property market conditions meant it had been unable to divest two properties and either wind up or sell its stake in Phileap, a special purpose vehicle holding unsold units in a freehold condominium development in Singapore.
Now, Lian Beng is seeking a further one-year extension, till April 19, 2021, for the sale of the balance units and thus the winding up of Phileap; and a two-year extension till April 19, 2022, for the two Australian properties.
In its Friday announcement, Lian Beng said its inability to complete the disposal was due to oversupply of units in Singapore and a weak property market in Brisbane; its role as a minority partner in the properties, making it dependent on its majority joint venture partners to assist in the disposal; and dampened demand due to the Covid-19 pandemic.
Lian Beng has applied to the Australian authorities to renew the development approval for the two properties there, hoping to enhance their sale value. If the application is granted, Lian Beng expects to take three to six months to appoint a marketing agent and market the properties, and another three to six months after finding an interested purchaser to negotiate the sale and complete the deal.
As for the units in Singapore, three have been sold in the last 12 months, with three remaining.
With the Covid-19 pandemic and bushfires in Australia, Lian Beng expects potential buyers to be wary of making large commitments. In these circumstances, a hasty sale would likely lead to losses, which would negatively impact shareholder value, said Lian Beng.
Having considered the above, and measures to monitor compliance and address potential conflicts of interest, the audit committee's view is that the extension is not prejudicial to SLB and its minority shareholders, said SLB in its announcement.
SLB shares closed up 4.35 per cent at $0.12, while Lian Beng shares closed down 1.32 per cent at $0.375 on Friday before the news.