Chip Eng Seng invests 153m yuan in Taicang City real estate development project

CHIP Eng Seng announced on Friday that it is investing about 153 million yuan (S$30 million) in a real estate development project in Taicang City, Jiangsu, China.

The company, through its wholly-owned subsidiary, and Haiyi Shantou Investment Group Co will jointly invest in Taicang Jianianhua Real Estate Development Co, which owns the real estate property for the project.

Following the investment, the company and Haiyi Investment will respectively hold 51 per cent and 29 per cent of the equity interest of the project. The remaining 20 per cent equity interest will be held by a newly incorporated entity to be controlled by local shareholder Ren Weimin.

The property covers a total land area of approximately 90,657 square metres and is located at 26 Dangqian Road, Huangjing Town, Taicang City. A mixed development has been constructed on the property over a land area of approximately 51,684 square metres, consisting of 12 residential buildings and two commercial buildings.

The project will involve the development and construction of a residential development on the remaining land area of approximately 38,000 square metres, with a gross floor area of approximately 111,111 square metres.

But with the project running out of funds in Phase 1, it has outstanding debts due to creditors, including its lending bank, contractors, service providers and suppliers. Legal action has been commenced, which led to assets of the project being currently sealed off by the local courts.

The objective of the investment is to apply the proceeds towards discharging its outstanding liabilities such that its assets will be unsealed, after which it can resume normal operations and commence work on the project, said the company.

As the company's first foray into property development in China, it said that the investment will provide the opportunity for it to establish a presence in the fast-growing Yangtze River delta area.

Chip Eng Seng's contribution of 153 million yuan will be funded from internal sources and 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 ended Dec 31, 2019.