Crane rental company MS Holdings to enter property development in Indonesia
It enters into a deal with ACT Holdings for a potential development JV in western Jakarta
Singapore
IN its foray into property development, crane rental company MS Holdings entered into a binding conditional term sheet agreement with ACT Holdings Pte Ltd on Jan 14 for a potential joint venture in property development in western Jakarta.
This will involve MS Holdings acquiring a stake in Singapore-incorporated Murray Prince Pte Ltd (JV company), currently owned by ACT and its subsidiary Aspen Development. Following a share subscription by MS Holdings, the latter will own 31.25 per cent, while ACT and Aspen will hold 61.87 per cent and 6.88 per cent respectively.
This joint venture will in turn raise its interest in a residential project in Indonesia to 80 per cent from 30 per cent currently.
The transaction is subject to, among other things, a definitive agreement being entered into between the parties and the approval of the shareholders of MS Holdings.
MS Holdings executive director and CEO Yap Chin Hock said: "To create new growth initiatives for the group, we have been studying various market segments in Asia for some time and this potential joint venture provides us with an opportunity to pursue new value propositions with an established and experienced developer."
ACT Holdings is a family-owned, diversified group with real estate and private equity investments in Singapore, the United States and China. The JV company currently owns 30 per cent of the issued share capital of Indonesian company PMA Graha Indah Semesta (target company), which owns some 11,000 square metres of land in the Alam Sutera Township, Serpong Utara District of South Tangerang, in Indonesia's Banten province where it is developing residential towers with ancillary commercial space. Sales and marketing of the property project are expected to commence in the first quarter of this year.
"Based on the local market fundamentals, we anticipate that this property project will generate a good amount of interest," Mr Yap said.
Under the term sheet, the JV company will acquire from Foreland Development Pte Ltd a 50 per cent stake in the target company for 94 billion rupiah (S$9.7 million) while Foreland Development shall novate a proportionate amount of loan (82.1 billion rupiah) to the JV company. Foreland will concurrently sell its remaining 7.5 per cent stake in the target company to PT Jaya Prima Integra (JPI).
Upon completion of the proposed transactions, the JV company will hold 80 per cent of the target company while JPI will hold the remaining 20 per cent.
In connection with the proposed investment, MS Holdings and ACT shall grant loans of S$5.38 million and S$5.83 million respectively to the JV company with the bulk to be used for payment of the balance consideration for the proposed acquisition.
The term sheet shall terminate two months from the date of the term sheet. Prior to its expiry, parties to the agreement are bounded by an exclusivity clause.
A trading halt on the shares of MS Holdings since last Thursday will be lifted on Tuesday.
