OUE to buy 6% stake in OUELH from Itochu for S$27.7m

OUE on Tuesday said it has signed a share-purchase agreement with Tokyo-listed Itochu Corporation to purchase 266.6 million shares, or a 6 per cent stake, in OUE Lippo Healthcare (OUELH) at S$27.7 million in cash, equivalent to S$0.10375 per share.

The consideration is about 2.5 times OUELH's closing price of S$0.041 on Tuesday, which may hint at another move from OUE to support OUELH, after the developer last month agreed to convert S$189.6 million of its shareholder loans to OUELH to perpetual bonds to enable the healthcare unit to reset and be better placed to tap capital markets to fund its future growth.

The latest announced share sale is expected to take place before the end of this month. Following the transaction, Itochu's subsidiary Browny Healthcare will have a balance 19.32 per cent in OUELH; OUE will hold 70.36 per cent.

OUE also signed a new memorandum of understanding (MOU) with Itochu, undertaking to seek to maintain its majority shareholding by not selling its OUELH shares, and will even purchase Browny Healthcare's shares at fair-market value if certain trigger events based on the financial results and operations of OUELH occur between now and December 2025.

The put option is also exercisable if an order or a resolution for winding up, judicial management, dissolution or administration of OUELH is made before the end of December 2025.

The MOU will lapse if both sides agree, or if Browny Healthcare ceases to hold at least 19 per cent of OUELH, or if Browny Healthcare sees its stake fall below 15 per cent as a result of it failing to take up its pro-rata proportion of shares in the event of any rights issue undertaken by OUELH.

OUE said this transaction "extends the strategic partnership with Itochu" and is in line with the group's commitment to the longer-term prospects of OUELH's healthcare business. It will enable OUELH to focus on executing its longer-term business plan with the firm support of its key stakeholders.

Itochu first took a strategic stake in OUELH in February 2018 with a placement of 562.5 million new shares. Following a subsequent one-for-one rights issue, it was issued another 562.5 million shares in OUELH, resulting in its current 25.32 per cent stake in OUELH before Tuesday's announcement.

OUE shared added S$0.02 or 1.75 per cent to S$1.16 on Tuesday.