SINGAPORE - Chevron House, the Raffles Place property debt-laden Oxley Holdings is selling, has a market value of $787 million as at end-June last year, the company disclosed in response to Singapore Exchange queries as it revealed more details about the conditions for the sale.
The Oxley unit that owns the property, Oxley Beryl, has a net tangible asset value of $106.6 million and an enterprise value of $1.025 billion.
Asked if there was a gain or loss on disposal arising from the transaction, Oxley said on Thursday (May 9) this will have a positive impact on the earnings per share and net asset value of the group for the financial year ending June 30, 2019. It added: "The profit on the transaction will be finalised and announced after the final completion."
Under the end-April deal inked, buyer Golden Compass, which is wholly owned by the US-based real estate fund AEW, would buy the entire interest in its wholly-owned subsidiary, Oxley Beryl, and take over the existing bank loans for an aggregate value of up to $1.025 billion. Golden Compass is to pay an initial $210 million for "first completion", then pay the balance of the consideration and discharge Oxley Beryl's bank loans upon final completion, after some works that began on the asset on March 1 are complete, and after the retail and banking units in Chevron House have been divested.
But the purchase was "subject to certain adjustments in accordance with the terms of the sale and purchase agreement (SPA)", Oxley had said. Oxley also said the SPA "provides for certain retention sums which shall be released upon the fulfilment of relevant conditions". SGX has queried Oxley about this.
On Thursday, Oxley revealed that the estimated amount of Oxley Beryl's bank loans outstanding after the completion of the AEI works, which the buyer is supposed to discharge upon final completion of the proposed sale, is about $520 million, while $295 million will be paid to the company on final completion.
That $295 million is subject to adjustments based on the AEI works that began on March 1, and divestment of the retail and banking units, and after subtracting a retention sum.
Oxley said that if the actual construction costs for some alterations, additions and AEI works that Oxley started on March 1 are less than the agreed estimated amount, Oxley Beryl shall pay to its parent savings on construction cost, but if that exceeds the estimated amount, the parent will pay for the additional cost.
If the sale proceeds from the divestment of the retail and banking units are above a target amount (unspecified by the company in its announcement), the excess up to an agreed amount (also unspecified in the announcement) shall be used to defray costs to be incurred by the company, including marketing costs and any excess beyond this agreed amount shall be shared equally between the company and the purchaser.
But if the sale proceeds are less than the target amount, the deficit shall be borne by the company.
That retention sum includes up to 10 per cent of an agreed value of the office tower, to be released within five business days after the
issuance of certificate of statutory completion and separate subsidiary strata certificates of title in respect of all units in the property, provided that the purchaser shall be entitled to retain certain amounts as provided in the SPA.
It also includes 10 per cent of the divestment value of the banking hall and retail units. This retention sum shall be released within five business days after Oxley Beryl's receipt of the corresponding amounts retained by the buyer(s) of the banking hall and retail units.
There is also a first retention sum of $41.4 million less the cost paid by the company for the AEI works prior to the first completion, to be released within five business days from the date of issue of the temporary occupation permit for the AEI works.
Asked about the "salient terms" for the divestment of the retail and banking units in Chevron House, Oxley said the process must be conducted by one or more rounds of public expression of interest conducted by a reputable marketing agency, commissions and fees must be borne by Oxley, and the consideration to be received by Oxley Beryl in connection with the asset divestment must be in cash.
Moreover, Golden Compass will have the right to require Oxley to purchase any or all of the units which remain unsold as at a long-stop date agreed (but not announced) between the purchaser and the company.
Oxley closed at $0.30 on Thursday, 1.5 cents or 4.76 per cent lower before the announcement was made.