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Datapulse served notice of compliance by SGX over hotel investments and management agreements
THE Singapore Exchange (SGX) on Friday issued a notice of compliance to Datapulse Technology relating to its recent minority investments in two hotels and the awarding of hotel management agreements to firms linked to the company's chairman and controlling shareholder.
Datapulse had earlier entered transactions to acquire stakes in hotels "sold with vacant possession" – a five per cent stake in Bay Hotel Singapore, and a 15 per cent stake in Holiday Inn Express Euljiro in Seoul.
The notice of compliance comes two days after Datapulse confirmed in its response to SGX queries that Travelodge Hotels Asia (TLA) was the hotel management company engaged to manage Holiday Inn Express Euljiro.
TLA is a unit of ICP Group, a company in which Datapulse chairman Aw Cheok Huat is a controlling shareholder and director. ICP provides hotel management services to certain hotels owned by investment holding company Plenitude, which is also the parent company of Bizcentre Capital.
Bizcentre Capital is Datapulse’s joint venture partner for the Seoul hotel acquisition, and owns 85 per cent of said hotel.
In its response to SGX, Datapulse said the agreement for the joint purchase of the Seoul hotel was separately negotiated from the hotel management agreement (HMA). Negotiations for the HMA only started after definitive agreements under the proposed investment were executed, it added.
Datapulse also said that Mr Aw was not involved in negotiations between TLA and Bizcentre Capital as he is not a member of TLA’s management team.
In March, Datapulse had attained independent shareholder approval to enter into interested person transactions regarding hospitality-related services by ICP Group – called the IPT general mandate.
Datapulse said that with the setting of guidelines and review procedures on terms involved, the IPT general mandate was created to ensure the hospitality-related transactions with ICP are carried out on normal commercial terms, and would not be prejudicial to the interests of the group and its minority shareholders.
In Friday’s notice of compliance, SGX said that in view of the acquisitions undertaken so far, listing rules governing interested person transactions as well as the IPT general mandate "do not apply to services provided by ICP Group to these hotels".
Thus, when it comes to hotel management agreements awarded to ICP Group, statement that Datapulse had earlier made that none of its directors and controlling shareholders had any interest, direct or indirect in the proposed investment – is "no longer true".
To address concerns that terms of hospitality-related transactions involving ICP Group "may not be on normal commercial terms", SGX will now require Datapulse’s audit committee to vet the terms of such transactions.
"The review by the company’s audit committee ensures that these transactions do not fall outside their purview because the company owns a minority stake in the hotels," SGX added.
Datapulse is also required to publicly disclose its basis for determining how minority stake investments in any hotel are in the interest of minority stakeholders, said SGX.
It also needs to justify its acquisition of "hotels with vacant possession" when decisions on the hotel management company appointment have not been executed, or are made solely by its joint venture partner.
The appointment of a hotel management firm for the Bay Hotel in Singapore will also be determined by a majority vote of the consortium which bought it.
According to the notice, Datapulse is also required by SGX to issue a regulatory update on the SGXNet whenever there is any change in interest of any of its directors or controlling shareholders in any transaction announced.
Failure to comply with these requirements will be deemed a flouting of listing rules, SGX added.
Nearly an hour after the notice of compliance from SGX, Datapulse shares fell 4.1 per cent or one Singapore cent to 23.5 cents, before regaining all its losses for the day so far to trade at 24.5 cents as at 2.29pm.