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Chip Eng Seng Corp unit to invest in Ho Chi Minh real estate development

CHIP Eng Seng Corporation announced a proposed investment in a real estate development project in Ho Chi Minh City, Vietnam which will be carried out through a loan agreement and a share purchase agreement.

The company's subsidiary in Vietnam, Viet Investment Link Joint Stock Company (VietLink) entered into a loan agreement with Giai Loi Investment Joint Stock Company to provide Giai Loi with a loan of approximately US$18.8 million.

The company also intends to acquire from Tran Vin Hong an aggregate of 23,270 shares in Giai Loi, representing 75 per cent of the charter capital of Giai Loi.

Prior to the entry into the definitive share purchase agreements for the proposed vendor sale, Mr Hong has granted an option to VietLink to purchase up to 23,270 shares. The total consideration for all the shares subject to the call option is approximately US$19.7 million, with the call option lapsing on May 29, 2018.

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The project involves the development and construction of a commercial centre and residential apartments for sale or lease on a site in Ho Chi Minh City. It comprises two residential tower blocks of 17 and 30 levels, and a five-storey commercial centre.

The site has a land area of 4,829 sq m, with an estimated total gross floor area of approximately 50,000 sq m. Construction of the foundation and the basement levels have been completed. Upon completion, the company will (through its shareholding interest in Giai Loi) have an effective interest of 60 per cent in the project.

The loan is funded from internal sources, and it is not expected to have a significant impact on the net tangible assets and earnings per share of the company for the current financial year ending Dec 31, 2017.

Negotiations for the definitive terms and conditions in respect of the proposed vendor sale are currently underway, and subject to the finalisation of the share purchase agreements.