OKH Global rescinds a contract with purchaser Chip Eng Seng Corporation

SINGAPORE – Singapore-based investment holding company OKH Global has rescinded a public tender contract with Chip Eng Seng Corporation (CES) due to the former did not obtain a written confirmation from JTC Corporation (JTC).

In a statement, OKH Global said the deadline for the written confirmation was on 8 August, 2023, according to the agreement the group made with CES.

OKH Global did not mention the reason of not receiving the written confirmation from JTC in a filing with Singapore Exchange (SGX).

OKH Global received a written notification on 9 August from CES, which stated that CES wanted to cancel the public tender contract.

“Following the contract’s terms. If this cancellation happens, as per the contract’s terms, we will give the deposit back and any money CES paid, without adding any interest or taking any deductions.

“The rescission of the contract is not expected to have any material impact on the net tangible assets and earnings per share of the Company and the Group for the current financial year ending 30 June 2024,” it said.

The group will make further announcements, in compliance with the requirements of the listing manual of SGX when there are material developments in relation to the public tender.

Background

On 25 July 2022, OKH Global launched the public tender to sell a ten-storey industrial building located at 12 Tai Seng Link Singapore 534233 together with the plant and equipment.

The building is a leasehold estate with a leasehold term of 30 years commencing from 9 Oct, 2012, and has a remaining lease of about 20 years.

It includes a basement carpark located within the Paya Lebar iPark and has a gross floor area of approximately 10,839.93 square meters and a land area of approximately 4,335.9 square meters.

The building is owned by OKH Global’s wholly owned subsidiary OKH (Woodlands) Pte Ltd. The public tender closed at 3pm (Singapore time) on 5 Sept, 2022.

Only one bid for the property

OKH Global only received one bid from CES after multiple public advertisements and marketing efforts.

The building would have sold to CES at SG$35 million (US$28.2 million), lower than its fair value at SG$38 million.

According to a statement on 8 Nov, 2022, OKH Global said the disposal of the building would benefit the group and its shareholders due to the disposal presented as an opportunity for the group to unlock the underlying value or capitalise its investment in the building without incurring significant additional capital investment.

“The proposed disposal will allow the group to reallocate its resources to strengthen its financial position. In particular, the property is currently mortgaged to a financial institution for a loan and the group would be able to utilise the net proceeds of the selling of the building to fully settle the outstanding loan, which will reduce the current borrowings and financing cost and improve the gearing ratio of the group.

“The disposal demonstrates the group’s commitment to recycle capital for future growth and investments. The proceeds from the proposed disposal will strengthen the group’s capabilities to pursue other projects and enhance returns for its shareholders.

“Subject to the completion of the proposed disposal, the group will retain a certain amount of cash proceeds, which would benefit the group and shareholders of the company insofar as acquisition and/or development of properties identified by the group as well as to pursue of other projects by the group in its ordinary course of business,” it said.

Based on the group’s latest audited financial statements for financial year 2022, the net loss attributable to the property is approximately SG$2.81 million.