CDL unit granted option to buy $126.3m worth of property, assets from Tan Chong

The potential buyer CDL Aries is owned by CDL's subsidiary, CDL Constellation.
The potential buyer CDL Aries is owned by CDL's subsidiary, CDL Constellation. ST PHOTO: KUA CHEE SIONG

SINGAPORE (THE BUSINESS TIMES) - Tan Chong International's indirect wholly owned subsidiary has granted a call option to a unit of City Developments Limited (CDL) to purchase its property, plant and equipment for $126.3 million, the auto dealer announced last Friday (Nov 19).

Based on an Accounting and Corporate Regulatory Authority filing seen by The Business Times on Tuesday, the potential buyer CDL Aries is owned by CDL's subsidiary, CDL Constellation.

An option fee of some $6.3 million, or 5 per cent of the consideration, is payable to Tan Chong should CDL Aries decide to exercise the call option, with the remaining $120 million to be paid upon completion of the transaction.

Located at 798 and 800 Upper Bukit Timah Road, the sale assets comprise an aggregate site area of 16,630 sq m, the buildings on the site, as well as their fixed plant and equipment, including all fixtures, lifts and air-conditioning units.

The collective fair value of the assets amounted to $95.9 million as at end-June.

Existing tenancies are due to expire on March 31 next year and come with an aggregate monthly rent of $49,776.

Tan Chong estimates the assets' profit before tax for the year ended Dec 2019 to be $559,900 and $359,228 for the year ended Dec 2020.

The group expects to net a gain of $29.8 million after the disposal, which it believes is a "good opportunity" for it to realise certain investments and non-core assets.

It intends to use sale proceeds from the transaction as working capital.

BT understands that CDL Aries was incorporated on Oct 29 this year as a property owner and developer. The company's directors comprise CDL general manager Chia Ngiang Hong and Mr Gerald Yong Guo Yeou, who is principal staff officer and head of business development and investments at CDL, according to his LinkedIn profile.

As at the midday trading break on Nov 23, shares of dual-listed Tan Chong were trading flat on the Singapore Exchange at HK$2.02. Shares of CDL were down by three cents or 0.4 per cent at $7.15.