CapitaMall Trust To Sell Hougang Plaza For $119.1m
CapitaMall Trust (CMT) has entered into an agreement to sell Hougang Plaza to Oxley Bloom, a fully owned subsidiary of Oxley Holdings, for $119.1 million. The acquisition price of Hougang Plaza is more than three times the market valuation of the property, which was put at $34 million as at 31 December 2011 by Knight Frank. Notably, CMT expects to realise a net gain of about $83.3 million from the sale, after taking into account the divestment fee and divestment-related expenses. Oxley intends to enter into a formal agreement with Lian Beng Land which will see the latter become a joint venture partner in redeveloping Hougang Plaza via a 50 percent stake in Oxley Bloom. It plans to turn the shopping mall into a mixed residential cum commercial development. Earlier in April, Oxley had bought the iconic McDonald’s Place at King Albert Park for $150 million.
Significance: CMT pointed out that the sale of the asset would unlock higher value for its unitholders and the net sale proceeds will provide CMT with greater financial flexibility to pursue possible acquisition opportunities or refinancing its debt.
OCBC Steps Up Its US Note Programme To US$10b
Oversea-Chinese Banking Corporation (OCBC) has updated its US commercial paper programme, doubling to US$10 billion and continues to expand its US dollar loan book. The current US$5 billion programme was set up on 16 August 2011 and total outstanding is about US$4 billion. OCBC head of group corporate communications, Koh Ching Ching noted that the US dollar is the most widely used international currency and the bank sees a good investor demand for short term commercial paper in US dollars issued by highly-rated US and foreign issuers. OCBC has been aggressive in expanding its trade finance business and at the end of 2011 almost doubled its US dollar loans to $35.7 billion from $18.9 billion a year ago as capital-constrained European banks retreat from Asia. Its US dollar loan to deposit ratio at end 2011 stood at 162 percent against a group loan to deposit ratio of 86.4 percent. Notably, OCBC will report its 1Q12 results next Friday.
Significance: OCBC’s increase in the size of its US commercial paper programme will enable the bank to tap into the demand in the market and provide them the flexibility to increase issuances. The proceeds will also allow it to further grow its lending business.
UPP Holdings Hops Onto The Emerging Market Bandwagon
Mainboard-listed UPP Holdings is jumping on the bandwagon to explore business opportunities in Myanmar. The paper manufacturer revealed its plans to restructure the group’s business activities, which could possibly see its entrance into infrastructure-related businesses, including power and construction supplies, property development, and the distribution of consumer products, with a particular focus on emerging markets in South-east Asia, especially Myanmar. Following which, UPP announced that the company has entered into a memorandum of understanding with Myan Shwe Pyi (MSP) to establish a joint venture (JV) company to be incorporated in Myanmar with total issued capital of US$20.9 million. Notably, the JV will purchase assets and contracts from MSP with a projected consideration of US$18.9 million. Shares of UPP have been rising and reaching new heights when Malaysian tycoon Tong Kooi Ong took on the position of chief executive officer and executive chairman in the recent week.
Significance: With its paper manufacturing business in the red and margins continually depressed with rising transport and energy costs, UPP expects that the restructuring will bring good potential for future growth in South-east Asia with its relatively young and expanding population and uneven phases of development.