Lian Beng seeks third extension for disposal of assets competing with SLB unit

PROPERTY player Lian Beng Group has again asked for more time to sell its assets that are in competition with its spin-off SLB Development, in light of dampened demand due to the pandemic, the two companies said in a joint statement on Friday night.

The Singapore Exchange said it has "no objections" to granting an extension, subject to SLB announcing:

* The extended deadline and the rationale for seeking an extension;

* Lian Beng's plans to fulfil the disposal by the new deadline; and

* The audit committee's views on whether the extension will be prejudicial to SLB and its minority shareholders.

Lian Beng had previously voluntarily agreed to dispose of its remaining two properties in Australia and wind up or liquidate Phileap Pte Ltd by April 19, in order to mitigate potential conflicts of interest with its unit SLB.

This was meant to be done within 12 months of SLB's listing date in April 2018. But due to unfavourable market conditions, the group was unable to divest two properties by the set deadline. It also could not wind up or sell its stake in Phileap Pte Ltd, a special-purpose vehicle holding unsold units in a freehold condominium development in Singapore.

So in April 2019, Lian Beng was granted a one-year extension.

The following year, another extension was granted till April 19, 2021, for the sale of the balance units and the winding up of Phileap. A two-year extension was also given for the two Australian properties till April 19, 2022.

This year, Lian Beng informed SLB on April 9, 2021 that it again needed more time to sell the two balance units in the condominium development and subsequently the initiation of the winding up and/or liquidation of Phileap Pte Ltd. The group requested a third extension till April 19, 2023.

Lian Beng has faced difficulties in selling the two last units, despite its efforts. In total, four out of six units in the freehold condominium development in Singapore's District 11 have been sold to date. Those that remain are penthouse units, which cater to the luxury market.

Lian Beng said that its target audience - mainly affluent foreign individuals - have not been able to physically travel to Singapore for viewings amid the pandemic, and are "understandably hesitant" to commit such large capital based solely on virtual viewings.

"The difficulties are further compounded by multiple new launches in Districts 9 and 10 in 2020, which have better positioning and provide buyers with greater choice than the remaining two units, which were completed in 2014," it added.

Lian Beng has revised its action plan to fulfil the sale. It has converted one of the remaining unsold penthouse units into a showroom unit, to aid marketing efforts. Renovation works were completed in March.

However, with the pandemic raging on, the group anticipates that potential purchasers would "still be wary of making large commitments" for property assets.

It is "not likely" that international travel will revert to pre-pandemic times in the short term, it said, adding that this would affect the ability of its target market to travel to view the units. This in turn would result in a smaller potential pool of customers, the company added.

Having considered the above, and measures to monitor compliance and address potential conflicts of interest, the audit committee's view is that the extension is not prejudicial to SLB and its minority shareholders, said SLB in its announcement.

In these circumstances, any hasty sale would likely lead to losses, which would negatively impact shareholder value, said Lian Beng.

SLB shares closed flat at S$0.125, while Lian Beng shares closed up 1 Singapore cent or 2.13 per cent at S$0.480 on Friday before the news.