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Chip Eng Seng to buy Adelaide site for A$14.5 million, from company linked to group CEO
CONSTRUCTION and property company Chip Eng Seng Corp has inked a interested-person deal for a vacant office building in Australia, which it plans to turn into a hotel.
It will pay A$14.5 million (S$14.6 million) for the 1,283 sq m freehold site in Adelaide, with the price reached after an internal evaluation, the company said on Monday.
Chip Eng Seng called the property "a quality site which is centrally located within the Capital City Zone in the central business district", and added that the proposed acquisition would let it expand its footprint in Adelaide after its acquisition of the Mercure and Ibis Styles Grosvenor Hotel in March 2018.
"The company believes that, similar to the Mercure Adelaide, the property when redeveloped into a new hotel will benefit from Adelaide's growing hospitality industry," it said in its announcement on the Singapore Exchange wesbite. "Furthermore, the freehold status of the property provides potential for good capital appreciation in the long term."
Company director and group chief executive Raymond Chia Lee Meng has a 40 per cent interest in another property development business, the LGB Group, which owns the property at 51, Pirie Street. This makes the vendor an associate of Mr Chia, and the proposed acquisition constitutes an interested person transaction under listing rules here, Chip Eng Seng noted.
Mainboard-listed Chip Eng Seng had previously entered into a non-binding letter of intent to possibly acquire all or part of the LGB Group's business, according to an announcement in January 2016, when Mr Chia was appointed.
Such potential acquisitions could involve two projects in Adelaide, one of which is 51, Pirie Street. Chip Eng Seng said on Monday that "the other project remains under evaluation by the company".
"Save for Mr Chia, none of the directors and, to the best knowledge of the directors, none of the controlling and substantial shareholders of the company, has any direct or indirect interest in the proposed acquisition," the company added.
It noted that Mr Chia abstained from the board's review and approval process for the Pirie Street deal.
The acquisition, to be financed by internal sources, is expected to go through by July 31 and is not expected to have any significant impact on the net tangible assets and earnings per share for the financial year to Dec 31.
Chip Eng Seng closed flat at S$0.84, before the announcement.