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

TAN Chong International's VI2 indirect wholly-owned subsidiary has granted a call option to a unit of City Developments (CDL) C09 t : C09 0%o purchase its property, plant and equipment for S$126.3 million, announced the auto dealer last Friday (Nov 19).

Based on an Acra filing seen by The Business Times (BT) on Nov 23, the potential buyer CDL Aries is owned by CDL's subsidiary, CDL Constellation.

An option fee of some S$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 a remaining S$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 square metres (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 amount to S$95.9 million as at end-June, 2021.

Existing tenancies are due to expire on Mar 31, 2022 and come with an aggregate monthly rent of S$49,776.

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

The group expects to net a gain of S$29.8 million post the disposal, which it believes is a "good opportunity" for it to realise certain of its 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 29 Oct, 2021 as a property owner and developer. The company's directors comprise CDL general manager Chia Ngiang Hong and Gerald Yong Guo Yeou, who is principal staff officer and head of business development and investments, 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 S$0.03 or 0.4 per cent at S$7.15.