Iconic Capitol Singapore sees light at end of tunnel after feuding shareholders settle

A settlement has been inked between shareholders feuding over the iconic heritage property Capitol Singapore, on Jan 3, 2018.
A settlement has been inked between shareholders feuding over the iconic heritage property Capitol Singapore, on Jan 3, 2018.ST PHOTO: MARK CHEONG

SINGAPORE - A deal has finally been struck after years of litigation over the iconic heritage property Capitol Singapore, deadlocked as relations soured between the shareholders - real estate veteran Pua Seck Guan and a member of the prominent Kwee family.

But now the Stamford Road project that had been described by a High Court judge to have "fallen into economic slumber", is finally seeing light at the end of the tunnel.

A settlement was inked on Wednesday that is expected to result in units of Mr Pua's Perennial Real Estate and Chesham Properties, an affiliate of Mr Kwee Liong Seen's Pontiac Land, parting ways, and one of them owning the entire project.

The settlement provides for a mechanism by which either Chesham or the Perennial units will acquire all of the other's shares in three associated firms that held the properties. These are Capitol Investment Holdings, Capitol Retail Management and Capitol Hotel Management.

The sale and purchase of shares is expected to be completed within 19 weeks of the date of the settlement agreement, according to an SGX announcement released after market hours on Wednesday.

No shareholder approval is required for the settlement. Further details on the purchase price were not disclosed.

The two were part of a consortium which put in the winning bid in 2010 for the restoration and development project. The aim was to return the heritate properties, Capitol Theatre, Capitol Building and Stamford House, to their former glory and to add new vibrancy to the City Hall area with a luxury hotel, retail shops, residences and a theatre.

But by 2016, the project, valued by market observers at about $1 billion, had stalled amid a bitter feud, with Perennial Real Estate launching winding-up applications on the three associated firms.

The High Court dismissed Perennial's application in March last year, ruling that it would not be just and equitable to wind up the companies as there was an exit mechanism available to Perennial. Under the Constitutions of the companies, any of the parties can offer to sell its shares to the other at a fair value.

Perennial appealed the ruling but lost in November last year.

Observers say the settlement is a boon for the project, which had been deadlocked as Mr Pua and Mr Kwee had not been on speaking terms for more than a year at the time of the winding-up applications. As a result, the management committee lost direction.

The Patina, a six-star hotel whose 157 rooms are spread across the Capitol Building and Stamford House, got its temporary occupation permit in October 2015 but remains unopened to this day as the shareholders could not agree on how to proceed. The mall opened in March 2015, and Capitol Theatre opened in May 2015.

The High Court judgment revealed that Chesham, which is held by the Kwee family, blamed Mr Pua for the hotel not opening, as he allegedly refused to countersign payments for various expenses incurred by Patina.

The Straits Times understands that at least $11.5 million needs to be pumped in to get the hotel up and running.