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SPH to develop, run data-centre facilities with Keppel Corp units

SPH to hold 40% of Memphis 1, Keppel units will hold remaining 60%


SINGAPORE Press Holdings (SPH), which publishes The Business Times, is setting up a joint venture (JV) with Keppel Corporation to develop and operate data centre facilities at SPH's Genting Lane property.

In a regulatory filing yesterday, SPH announced that it will hold 40 per cent of the JV company, named Memphis 1, while units of Keppel will hold the remaining 60 per cent.

Memphis 1 has an option to acquire SPH's leasehold interest in 82 Genting Lane for S$50 million, being the value of the property according to a valuation done by Jones Lang LaSalle in July 2018 and updated in September 2019.

The sale of the property is expected to be completed on July 17.

Following the completion of the deal, SPH will effectively have disposed of 60 per cent of its stake in the property.

SPH will initially subscribe for S$1.4 million worth of Memphis 1 shares while Keppel will initially subscribe for S$2.1 million worth of Memphis 1 shares.

Both SPH and Keppel will also subscribe for bonds to be issued by Memphis 1. SPH's share of the bond subscription is S$23 million while Keppel's is S$34.5 million.

SPH and Keppel also undertake to contribute additional funds to Memphis 1.

SPH's total maximum contribution to the JV will be S$139.6 million while Keppel's will be S$209 million.

The balance amounts will be paid progressively by way of debt securities to be issued by Memphis 1 from time to time, and which will be subscribed to by both Keppel and SPH.

SPH said the proposed transaction would "enable the group to maximise economic returns and improve the return on capital of an existing asset and to enter and participate in a growing sector".

It expects that "the secular trend towards digitalisation and the movement of data into the cloud will drive strong demand for hyperscale data centres".

Based on SPH's unaudited financial statements for H1 FY2020 ended Feb 29, the disposal of the 60 per cent stake in the property will result in a gain of S$25.5 million as the sale price is greater than the value of the property on SPH's books.

Meanwhile, the net loss attributable to the effective interest in the property is S$1.3 million.

If the transaction had been carried out before the end of SPH's FY2019 on Aug 31, its net tangible asset per share would have increased from S$2.08 to S$2.09. Its earnings per share would have increased from S$0.13 to S$0.15.

SPH and Keppel share a common chairman: Lee Boon Yang. Dr Lee has abstained from all deliberations and decisions of both boards in connection with the proposed transaction, the companies said separately.

Shares of SPH on Monday closed one Singapore cent lower at S$1.29; Keppel Corp shares were nine Singapore cents down at S$5.95 on Monday, before this announcement was made.

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