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First Sponsor units enter into SPA to buy Guangdong land for preliminary price of 404m yuan

MAINBOARD-LISTED First Sponsor’s wholly owned subsidiaries have on April 25 entered into a definitive conditional sale and purchase agreement (SPA) to buy a mixed use development site in China’s Guangdong province, at a preliminary price of 404 million yuan (S$81.6 million). 

First Sponsor will acquire the entire stake in Concord Focus Development, which owns the development site comprising three land parcels with a total site area of 36,405 square metres, the Singapore-based property developer said on Thursday after the market closed.

The site has a gross floor area (GFA) of about 76,570 sq m, according to First Sponsor’s press statement on Thursday announcing its first-quarter results.

First Sponsor’s subsidiaries – FS Dongguan No 9 Investment Consultancy and Wenjiang (BVI) Limited – entered into the SPA with Concord, three individuals who together own all of Concord’s shares, as well as Dongguan Kanghe Property Management Consulting Services.

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The three Concord shareholders are Chung Kwong Keung, Poon Sau Tin and Poon Sum. Dongguan Kanghe is Concord’s wholly owned subsidiary which develops residential and commercial properties.

First Sponsor said in a March 4 filing that the Guangdong site has land use rights with expiry dates of Jan 31, 2088 for residential use and Jan 31, 2058 for commercial use.

The actual price that First Sponsor will pay for the acquisition will be an amount equal to the adjusted consolidated net asset value of Concord and Dongguan Kanghe as at the date of completion of the acquisition, the group said on Thursday.

First Sponsor also said on March 4 that the property will be accounted for at an agreed commercial value of 738 million yuan, taking into account the land use rights.

Under the SPA, Wenjiang (BVI) will pay a preliminary price of 404 million yuan on the completion date of the acquisition. This amount is equal to the adjusted consolidated net asset value of Concord, based on Concord’s management accounts as at March 31.

The difference between the actual and preliminary considerations is to be settled within five business days after the actual price has been conclusively determined.

First Sponsor plans to look for a third party as one of the other buyers, subject to the group retaining a controlling stake in Concord after the acquisition.

On Thursday, First Sponsor said its first-quarter net profit rose 39 per cent to S$23.8 million, thanks to a “strong showing” of its property financing business segment.

Its shares were trading at S$1.28 as at 2.05pm on Friday, up one Singapore cent.

Document 1: First Sponsor's April 25 filing on the sale and purchase agreement

Document 2: First Sponsor's March 4 filing on the proposed acquisition