SINGAPORE - OUE Lippo Healthcare's (OUELH) non-interested directors are recommending that shareholders approve an acquisition of stakes in First Real Estate Investment Trust (Reit) and its manager after an independent financial adviser found that the deal was made on "normal commercial terms".
The company has called a shareholders' meeting on Oct 11 to vote on the deal.
OUELH announced on Sept 18 that it plans to buy a 10.63 per cent stake in First Reit for $102.7 million, and a 40 per cent stake in the Reit's manager, Bowsprit Capital Corp, for about S$39.6 million. OUELH's parent, OUE, will acquire the remaining 60 per cent of Bowsprit for $59.3 million.
The deal values Bowsprit at a 26.5 per cent premium to its net asset value (NAV) after adjusting for a dividend that has been paid out, and at a 31.1 per cent premium over its NAV after its assets have been revalued to current market prices, said RHT Capital, which was appointed as independent financial adviser by OUELH's non-interested directors.
The consideration for the First Reit units, at $1.2280 per sale unit, is at a 21.3 per cent to the trust's adjusted NAV and a 22.1 per cent premium over its revalued NAV.
Those valuations are within the range of comparable companies, RHT Capital said.
"The proposed transactions, as interested person transactions, are on normal commercial terms and not prejudicial to the interests of the company and its minority shareholders," the adviser said.
OUELH's non-interested directors accepted RHT Capital's findings, and are recommending that shareholders vote in favour of deal.
Shares of OUE were trading flat at $1.53 as at 9.23am on Wednesday. OUELH shares, which are trading on an ex-dividend basis, were down 11.1 per cent, or one cent, at eight cents. First Reit units were unchanged at $1.22.