Sheng Siong to buy New World Centre strata unit from TA Corp for S$17.25 million

MAINBOARD-LISTED supermarket operator Sheng Siong Group is buying a strata-titled shop unit at New World Centre for a below-market value of S$17.25 million, it said on Friday.

Sheng Siong already leases the 1,790 square metre (19,270 square foot) basement property from seller Sino Holdings (S'pore), a wholly-owned unit of builder TA Corp.

The tenancy agreement will end upon the completion of the transaction for the property, which has 72 years left on its 99-year leasehold tenure.

As such, Sheng Siong's board said the planned purchase - which is expected to be completed in three months, unless otherwise agreed - is in the group's best interests.

It added that the deal for 1, Jalan Berseh, #B1-02 to #B1-22 is not expected to have any significant impact on Sheng Siong's financial performance for the financial year.

The news came a day after Sheng Siong said that it is looking for new retail space in Singapore, while reporting earnings of S$65.9 million for the six months to June 30.

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Separately, TA Corp disclosed in a bourse filing that it will make a net loss of S$2.94 million on the sale, based on a book value of S$19.82 million.

If the sale had gone through on Jan 1, 2020, TA Corp's pro forma loss per share would have widened from 10.8 Singapore cents to 11.3 cents, it noted.

If the sale had been done on Dec 31, 2020, pro forma net tangible assets would have shrunk from 18.6 cents a share to 18.0 cents a share.

But, laying out reasons for the deal, the board said the transaction was in TA Corp's interests as it will allow the group to improve liquidity and optimise asset utilisation.

TA Corp plans to use the expected net proceeds of S$16.88 million to settle outstanding amounts under a credit facility secured by the property, and for general working capital.

TA Corp last closed at S$0.071, before the transaction was announced, while Sheng Siong added S$0.01, or 0.64 per cent, to S$1.57 on Friday.