Maxi-Cash to buy four shops for S$23.7m from chairman's firm

Singapore

MAXI-CASH Financial Services Corporation is looking to buy four investment properties for a total cash consideration of S$23.7 million.

Its wholly-owned subsidiary, Maxi-Cash Property, on Tuesday entered into a conditional sale and purchase agreement with 8G Investment for the acquisition of the properties, several of which house its pawnbroking and retail businesses.

8G Investment is a private real estate developer. Its shareholders are Maxi-Cash director, non-executive chairman and controlling shareholder Koh Wee Seng, his mother (Tan Su Lan) and wife (Lim Kwee Hua). Mr Koh also holds a 79.58 per cent interest in Maxi-Cash. 8G is the registered proprietor of the four properties: Block 165, Bukit Merah Central, #01-3661; Block 101, Yishun Avenue 5, #01-95; Block 702, Ang Mo Kio Avenue 8, #01-2515; and 40 Changi Road. The first three are Housing Board shops, while the fourth is a strata shop unit.

The proposed acquisition will enable the group to own the properties instead of periodically renewing the leases which could affect the operation and costs of the businesses, Maxi-Cash said. It is also in line with the group's strategic plans to acquire assets with the potential for capital gain, while being used (or potentially used) for the purposes of its existing pawnbroking and retail businesses.

The estimated net profit before income tax attributable to the properties for the first half year ended June 30 was S$69,000.

This figure is determined by reference to the rental yield of the properties based on the existing tenancies (including those with Maxi-Cash) less property tax, estimated interest expenses and depreciation. It is equivalent to 1.02 per cent of Maxi-Cash group's net profits of S$6.85 million for the same six-month period.

The consideration of S$23.7 million was arrived at based on arm's length negotiations between Maxi-Cash Property and 8G. It is at a 1.66 per cent discount to the S$24.1 million market value of the properties determined by independent valuer JLL.

Maxi-Cash has paid a deposit of around S$1.2 million, equivalent to 5 per cent of the consideration. The remaining amount will be paid on completion of the acquisition.

Completion of the acquisition is subject to approval by independent shareholders, HDB's consent for the purchase of the three HDB shops, and satisfactory replies from the legal requisitions to the local authorities. If any of the three conditions are not satisfied by March 31, 2020, the deal is off and all monies paid by Maxi-Cash will be refunded free of interest.

Maxi-Cash will convene an extraordinary general meeting (EGM) to seek shareholder approval. Mr Koh and his associates will abstain from voting as the proposed acquisition is an interested-person transaction.

Maxi-Cash shares fell 0.1 Singapore cent, or 0.8 per cent, to 12.7 cents on Wednesday.