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CDL appoints Deloitte to evaluate investment in China's Sincere Property

PROPERTY giant City Developments Limited (CDL) on Wednesday said it has appointed Deloitte & Touche Financial Advisory Services as its external financial adviser to assist in further evaluating and reviewing its investment in China-based Sincere Property Group.

This comes after CDL director Kwek Leng Peck resigned last month, citing disagreements with the board and management on the group's investment in Sincere, as well as its management of London-based unit, Millennium & Copthorne Hotels.

On Wednesday, CDL's board noted that it mandated the evaluation and review by Deloitte in view of the "challenges relating to Sincere's liquidity position" following the Covid-19 pandemic and "new measures to further tighten liquidity for real estate companies in China, the most recent being the 'Three Red Lines' policy". The "Three Red Lines" refer to metrics regarding debt that developers will have to meet if they want to borrow more, Bloomberg previously reported.

In a bourse filing on Oct 21, CDL noted that its investments in Sincere totalled about S$1.9 billion. These include a 51 per cent joint-venture equity investment in Sincere amounting to 4.4 billion yuan (S$896.8 million). It had also subscribed for US$230 million worth of bonds issued by Sincere, and provided a working capital loan of 650 million yuan.

The investments also include a 1.5 billion yuan liquidity-support undertaking provided by CDL for Sincere's bonds maturing on Oct 26, 2020, as well as a 1.5 billion yuan corporate guarantee in relation to an external bank loan obtained by Sincere.

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Separately, CDL on Wednesday noted that its investment in Sincere which was completed in April this year, is a "strategic investment" which provides the group with a platform comprising different asset classes across 18 cities in China.

As at June 30, CDL group's global asset portfolio amounted to S$23.8 billion, of which China accounted for 14 per cent.

CDL shares were trading at S$6.47 as at 1.30pm on Wednesday, up S$0.03 or 0.5 per cent.

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