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Singapore Daily Bulletin – 24/12/12

Up To $581 Million For Two Deals If Rowsley Chooses To Divest Current Holdings
Rowsley, an investment firm controlled by billionaire Peter Lim, looks set for a transformation to become a real estate player after the announcement of two deals worth up to $581 million if it chooses to divest its current holdings. On 22 December, Rowsley entered into non-binding term sheets in a reverse takeover deal to acquire RSP Architects Planners & Engineers (RSP) for up to $223 million. The deal will also see a purchase of 9.23 hectares of land in Iskandar, Johor for $358 million from Malaysia’s Vantage Bay. RSP, via the reverse takeover, will be listed on the Singapore Exchange through Rowsley. Shares will be issued for both acquisitions at 15 cents each, which will be further subject to definitive agreements and due diligence. The 15 cents price represents a slight premium over its last traded price of 14.1 cents before it was halted for trading on 21 December. Rowsley will purchase the plot of land in Iskandar from Vantage Bay, a 70 percent joint venture owned by Peter Lim. It will be developed as an integrated mixed use township comprising malls, homes and offices, and sits just a few hundred metres from the new customs building in Johor.

Significance: The proposed transactions will create new value for shareholders when completed. It will transform Rowsley from an investment holding company into a major real estate player in the fast emerging Iskandar region.

Lippo Set To Benefit From Its Parent Group’s Plan To Build More Malls Beyond Jakarta
Parent Group PT LIPPO Karawaci (PTLK) of Lippo Malls Indonesia Retail Trust (Lippo), plans to build more shopping malls and hospitals in cities beyond Jakarta to capitalise on an expanding middle class. PTLK is Indonesia’s largest publicly traded real estate developer by assets, and it will fund projects by selling completed properties into its two Singapore-listed property trusts, Lippo and First Real Estate Investment Trust (First REIT). Lippo holds the parent’s malls while First REIT owns its hospital properties. About half of the 15 new malls PTLK plans to complete by 2015 will be built by Lippo. The malls will be in cities such as Semarang in north Java, Denpasar in Bali and Manado in north Sulawesi province. It is anticipated that some of these cities will see growth rates higher than Jakarta, which would lead to urbanisation. The spending power of a growing middle class have been fervently targeted by developers and purchasing power in Indonesia is very strong. PTLK is seeking to boost the value of its assets to US$8 billion in five years from its current of approximately US$3 billion. It will do so by moving forward on development projects on the 1,400 hectares of land it holds now.

Significance: On the back of more malls under Lippo’s current mall portfolio, higher purchasing power in Indonesia, and possibility of urbanisation, Lippo is set to ride on this wave of benefit which should see higher revenue contributions, which should also have a potentially positive impact on its net margins.

Acquisition Of Soluble Coffee Assets And Businesses Of Seda Solubles For US$52m; Olam International
Leading global integrated supply chain manager and processor of agricultural products and food ingredients, Olam International (Olam) has acquired the soluble coffee assets and business of Seda Solubles (Seda) for US$52 million through a bidding process. Seda is a leading producer of soluble coffee and coffee related products with a fully integrated production platform. The acquired key assets consist of a manufacturing facility and a packaging facility in Spain, a storage and packaging facility in Russia and Seda’s brands. Olam opines that the acquisition is a deem fit and in line with its growth plans for its coffee business. It is expected that US$7 million will be further committed by Olam in capital expenditure over the next two years for asset overhaul and maintenance. The US$52 million shall be discharged on a cash basis from internal accruals.

Significance: Olam said that despite the financial situation surrounding Seda at the corporate level, the business has managed to retain its customer operating franchise. It is expected that this business will deliver an EBITDA margin of 20 percent and an Equity IRR of 30 percent.