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Chip Eng Seng to acquire Maldives lagoon for development into resort

CHIP Eng Seng has entered into a 70-30 joint venture with partner Tropical Developments to acquire a lagoon in the Maldives, it said on Monday.

Chip Eng Seng will make an initial capital contribution of US$7 million to the joint venture, and intends to develop the lagoon into a five-star resort.

Tropical Developments is incorporated in Singapore and affiliated to the current lessee of the lagoon. It is also an affiliate of Amin Construction, which was the main developer and contractor for Chip Eng Seng's first hospitality project in the Maldives.

Amin Construction is an established construction firm that has experience in the development and construction of major projects in the Maldives, including the development and construction of resorts. Chip Eng Seng said: "The company has maintained a good working relationship with Amin Construction."

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Under the terms of the agreement, the joint-venture company will not acquire the leasehold interest in the lagoon at a price exceeding that which the current lessee had paid for, the group added.

The lagoon is located in North Male Atoll, and the initial capital will be used to fund, among other things, the acquisition of the remaining leasehold interest in the lagoon, the fee for the transfer of this leasehold interest, and the fees and rental to be paid to the applicable government agencies in the Maldives in connection with the development of the resort.

Chip Eng Seng said: "The company has been keen on extending its footprint in the hospitality sector in the Maldives and has been on the lookout for a viable opportunity to own and develop its second resort. The company is of the view that the lagoon, which has a tenure of 50 years commencing from Aug 9, 2016, presents such opportunity."

Chip Eng Seng shares closed flat at S$0.625 on Monday.