Chip Eng Seng, SingHaiyi and Chuan Investments incorporate JV companies for Maxwell House project

CHIP Eng Seng announced on Wednesday after trading hours that its wholly-owned subsidiary, CEL Development, together with joint venture (JV) partners SingHaiyi Investments and Chuan Investments, has incorporated two JV companies Maxwell Residential and Maxwell Commercial.

This comes as the three parties have successfully tendered for the enbloc acquisition of Maxwell House for S$276.8 million.

Each JV company has an issued and paid-up share capital of S$10. CEL Development will hold a 40 per cent stake in the JV, with SingHaiyi and Chuan Investments each holding a 30-per-cent stake.

The JV partners have provided shareholders' loans in the aggregate principal amount of S$22.14 million, with the portion of each shareholders' loan provided by each of the JV partners in accordance with their respective stakes. The loans are meant to provide funding to the JV companies for the acquisition, including satisfying the tender fee, stamp duty and the purchase price of the property.

Chip Eng Seng said in a bourse filing that the investment by CEL Development and SingHaiyi in the project constitutes an interested-person transaction of the company.

This comes as Singapore billionaire couple Gordon Tang and Celine Tang are controlling shareholders of both SingHaiyi and Chip Eng Seng. Mrs Tang is also SingHaiyi's group managing director, as well as Chip Eng Seng's non-independent and non-executive director and non-executive chairman.

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Chip Eng Seng said that its Audit and Risk Committee is of the view that the provision by CEL Development of its portion of the shareholders' loans is not prejudicial to the interests of the company and its minority shareholders. It added that the risks and rewards for each JV partner are in proportion to the equity of each JV partner and that the terms and conditions relating to the shareholders' loans are not prejudicial to the interests of the company and its minority shareholders.

The company said that its contribution to the JV companies and the shareholders' loans was funded from internal cash sources. Its investment in the project is not expected to have a material impact on the net tangible assets and earning per share of the company for FY2021.

Shares of Chip Eng Seng closed down by 0.5 Singapore cent, or 1.14 per cent, at 43.5 Singapore cents on Friday.