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Rich Capital plans to sell stake in Peak Court joint venture for S$6.6m

CATALIST-LISTED Rich Capital Holdings is proposing to dispose of its 50 per cent stake in investment holding company Rich Capital Realty for S$6.6 million. 

Rich Capital Realty owns a 30 per cent stake in TSRC Novena – a joint venture company formed by Rich Capital and Tuan Sing Holdings - which owns the strata lots and common property in Peak Court, a freehold residential development on Thomson Road. 

The company had entered into a sale and purchase agreement on Monday with an independent third-party Qiu Jinzhang, who invests in various businesses, according to a regulatory update on Tuesday morning. 

The consideration, to be paid in cash, was arrived at after taking into account Rich Capital Realty's unaudited net tangible asset value and a valuation report by Savills Valuation and Professional Services (S).

Rich Capital Realty's book value and net tangible asset value was around S$6.3 million as at Sept 30, 2019. Net loss attributable to Rich Capital Realty is S$12,144. Meanwhile, the independent valuation report by Savills estimated the sale shares' market value to range between approximately S$2.3 million and S$3.0 million.

The S$6.4 million in net proceeds from the proposed disposal will be primarily used for other existing property development projects, as well as general working capital purposes. It will also be used to pay the retiring debt obligation in relation to Peak Court.

Rich Capital said the rationale for the proposed disposal is mainly to raise cash to support its existing property development activities and mitigate material uncertainty to operate as a going concern while realising a gain from the proposed disposal.

The proposed disposal will not materially change the risk profile of the group's core business, it added.

Shares in Rich Capital have been suspended since June 2019.