Keppel Land subsidiaries enter JV with HK-listed Sino-Ocean Group

KEPPEL Land has, through two of its wholly-owned subsidiaries entered into a cooperation-framework agreement with two subsidiaries of Hong Kong-listed Sino-Ocean Group to jointly develop eight plots of land in Tianjin, a port city in north-eastern China.

The two Keppel Land subsidiaries are Changzhou Fushi Real Estate Development and Tianjin Fushi Real Estate Development, and the two subsidiaries of Sino-Ocean are Tianjin Pulida Real Estate Construction and Development Company and Qingdao Yuanjia Real Estate Company, said Keppel Corporation in a bourse filing on Friday.

The eight plots of land to be developed will have a total size of 28.7 hectares, and are in Tianjin's Binhai New Area.

Pursuant to the framework agreement, Tianjin Pulida has agreed to pay Changzhou Fushi a total consideration of about 348 million yuan (S$71.6 million) in cash in three installments for a 51-per-cent equity stake in Tianjin Fushi, which owns the eight plots of land.

The final installment is due by December this year.

Further, Tianjin Pulida will also extend loans of some 109.8 million yuan to Tianjin Fushi, which will be used to repay existing loans from Changzhou Fushi and its affiliates.

The consideration and loan amount were arrived at on a willing buyer, willing seller basis, taking into account, among other things, the adjusted net asset value based on the agreed value of the development site attributable to the 51-per-cent equity stake of 348 million yuan as at March 31, said Keppel in its announcement.

The transfer of the equity stake to Tianjin Pulida is conditional upon full payment of the consideration and loan amount, completion of the registration procedure for the change in equity in Tianjin Fushi, as well as Tianjin Fushi having received a new business licence - in which transfer is expected to take effect by December.

Following completion of the transfer of the 51-per-cent equity stake, Changzhou Fushi will reduce its total equity stake in Tianjin Fushi from 100 per cent to 49 per cent. Tianjin Fushi will become an associated company of Keppel Corporation.

Had the transfer been completed on Dec 31, 2020, the net tangible asset per share for Keppel Corporation as at the end of last year would have increased from S$5.02 prior to the transfer, to S$5.07 post-transfer. (see amendment note) And if the transfer had been completed on Jan 1, 2020, loss per share for FY2020 would have been reduced from 27.8 Singapore cents to 22.2 Singapore cents.

Shares of Keppel Corporation slipped S$0.08 or 1.46 per cent to end at S$5.42 on Friday.

Amendment note: An earlier version of the article said that the net tangible asset per share would have increased to S$5.08 post-transfer. The article has been amended to reflect this change.