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OUE Lippo Ltd - a subsidiary of mainboard-listed real estate owner, developer and operator OUE Ltd - has entered into a conditional subscription agreement to subscribe for 2.9 billion new ordinary shares in Hong Kong-listed Gemdale Properties and Investment Corporation Ltd (GPI) at an issue price of HK$0.52 per share, amounting to about HK$1.508 billion (S$257 million).
In an announcement to the Singapore Exchange (SGX) on Sunday, OUE Ltd said the deal, which was signed last Friday, is expected to allow OUE Group to gain access and exposure to the real estate market in China through its shareholding in GPI, as well as the opportunity to leverage on future potential collaborations and partnerships with GPI, one of China's established real estate developers.
The proposed subscription may also allow OUE Group to enhance long-term shareholder value via GPI's in-built development growth prospects and opportunities, said OUE Ltd.
It added that the issue price of HK$0.52 per share represents a discount of about 16.1 per cent to GPI's net tangible asset value of HK$0.62 per share as at June 30, 2014.
The issue price of HK$0.52 also represents a premium of approximately 18.7 per cent to the volume-weighted average price of about HK$0.4382 for each ordinary share in GPI's capital, based on trades done on The Stock Exchange of Hong Kong Ltd on Dec 24.
Under the deal, the subscription shares will represent about 22.97 per cent of the enlarged issued shares of GPI immediately after completion of the proposed subscription.
The subscription consideration will be payable by OUE Lippo in full on the completion date upon application by OUE Lippo for the subscription shares.
GPI is principally engaged in property investment, development and management of residential, commercial and business park projects in Greater China.
As at end-June this year, GPI had a total land bank of approximately 4.07 million square metres spread across nine cities in Greater China, including Beijing, Shanghai and Dalian.