OKH GLOBAL said on Tuesday (Nov 8) that it will sell an industrial building in Tai Seng to Chip Eng Seng Corporation for S$35 million.
OHK launched a public tender in July for the sale of the property, located at 12 Tai Seng Link, which closed on Sep 5. The vendor received only one bid at S$35 million from CES Properties (Tai Seng), which is a wholly-owned subsidiary of Chip Eng Seng.
A letter of acceptance in relation to the proposed sale of the property via the public tender was issued to the purchaser on Tuesday.
The consideration is below the book value of the property of S$38 million, and the company is expected to record a loss on disposal of around S$3 million, OKH said in the bourse filing.
However, it noted that the disposal is "expected to benefit the company and its shareholders" as the property has a remaining lease of around 20 years, which could impact its future value.
It added that the proposed disposal will allow the group to re-allocate its resources to strengthen its financial position, and said the proposed disposal "demonstrates the group's commitment to recycle capital for future growth and investments".
The value of the assets being disposed represented around 65.9 per cent of the group's net tangible assets as at Jun 30, 2022.
OKH noted that the transaction is an "interested person transaction".
Celine Tang, who is chairman and controlling shareholder of OKH, also has ties with Chip Eng Seng. She and her husband, Gordon Tang, hold around 38.2 per cent of Chip Eng Seng shares.
OKH said Celine Tang, being a common director of both OKH and Chip Eng Seng, abstained from all deliberations for the award of the public tender by OKH to the purchaser on the respective boards of both companies.
OKH chief executive Lock Wai Han, who also sits on the board of Chip Eng Seng, also abstained from all deliberations for the award of the public tender on the respective boards of both companies and the audit committee of Chip Eng Seng.
OKH said its audit committee has reviewed the terms of the proposed disposal, and is of the view that the disposal of the property is on normal commercial terms and is not prejudicial to the interests of the company and its minority shareholders.
OKH shares closed unchanged at S$0.025 on Tuesday, while Chip Eng Seng climbed 0.7 per cent to close at S$0.725, before the announcement.