Oxley inks deal to sell Chevron House for $1.025b

Chevron House is a 32-storey commercial development comprising 27 levels of office space and a five-storey retail podium.
Chevron House is a 32-storey commercial development comprising 27 levels of office space and a five-storey retail podium.ST FILE PHOTO

Debt-laden developer also looking to sell its Novotel and Mercure hotels in Stevens Road

Debt-laden developer Oxley Holdings is selling Chevron House for up to $1.025 billion, after paying $660 million for the Raffles Place block in December 2017.

The deal involves Golden Compass buying the Oxley Beryl unit and taking over the bank loans, with an initial payment of $210 million.

Chevron House at 30 Raffles Place is a 32-storey commercial development comprising 27 levels of office space and a five-storey retail podium with net lettable floor area (NLA) of about 261,280 sq ft.

Oxley announced in February that it had plans to increase the NLA by 43 per cent.

The $1.025 billion sale price works out to about $2,739.43 psf on the increased NLA.

The property is on a 99-year leasehold site with about 70 years to run.

Oxley said the proposed sale is expected to have a positive impact on its net tangible assets per share and earnings per share for the financial year ending June 30, 2019.

It will complete renovation work, which started on March 1, before the sale is closed.

The move was made after arm's length negotiations, taking into account the enterprise value of its subsidiary Oxley Beryl, said Oxley.

Under the deal, Golden Compass is to pay $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.

Golden Compass will then have to pay the balance and discharge Oxley Beryl's bank loans upon the final completion of the sale. Following this, the remaining shares in Oxley Beryl will be transferred to Golden Compass.

The sale will be closed after the March 1 works are done, and after the retail and banking units in Chevron House have been divested.

The deal is still subject to certain conditions, including shareholder approval if required by the Singapore Exchange.

Oxley, one of Singapore's most highly-geared developers, has been in deleveraging mode of late.

It said it aims to gradually reduce net gearing to one time from 2.55 times net debt-to-equity as at Dec 31, 2018.

It has $300 million in retail bonds coming due in November this year and $150 million in May 2020.

The firm had total debt of $3.9 billion and cash and cash equivalents of $248.5 million as of Dec 31, 2018, according to Bloomberg-compiled data.

Oxley is focused on selling assets and effecting a quick turnover for completed projects so it can reduce these debts.

The company is also looking to sell its Novotel and Mercure hotels in Stevens Road.

A version of this article appeared in the print edition of The Straits Times on May 01, 2019, with the headline 'Oxley inks deal to sell Chevron House for $1.025b'. Print Edition | Subscribe