IOI Properties Group Berhad has informed that its Group Chief Executive Officer Lee Yeow Seng who is a substantial shareholder of the group is proposing to the board to participate in the in the joint development of “Shenton House”, a commercial property located at 3 Shenton Way, Singapore.
Shenton 101 Pte Ltd is a company incorporated in Singapore of which the sole shareholder is Lee Yeow Seng has successfully tendered for the collective sale and purchase of Shenton House at a consideration of SGD538 million. Shenton 101 will therefore carry out the redevelopment of Shenton House, the redevelopment works for which are scheduled to commence at the end of 2025.
LYS has disclosed that his role in the redevelopment of Shenton House through Shenton 101 may potentially interfere with or be in conflict with the interest of IOIPG as IOIPG is also involved in the business of property development and property investment in Singapore.
Henec, the proposal put forward for the consideration of the Board involves the proposed acquisition by IOIPG via sale of all or any part of the existing shares in the share capital of Shenton 101 in order to address the potential conflict of interest position and as a means of mitigating the potential conflict of interest situation.
LYS has emphasised to IOIPG that Shenton 101 is ready and able to proceed with the development planning of Shenton House under the terms of the tender and that Shenton 101 is well on the way to put in place funding to enable it to proceed with the redevelopment and that the reason that the Group CEO is extending the proposal is to help resolve or address the potential conflict of interest situation.
Shenton House is located in Singapore’s central business district which spans 3,377 square meters and is zoned as ‘Commercial’ with a gross plot ratio of 11.2 according to the Urban Redevelopment Authority of Singapore’s Master Plan 2019. The current land lease of Shenton House has approximately 44 years remaining, with the potential to be extended to a fresh 99-year leasehold. Further, according to the Singapore’s central business district incentive scheme, Shenton House is eligible for a 25% bonus gross floor area which can be redeveloped into a mixed-use commercial with residential development or a hotel at the GPR of 14. As such, Shenton House is earmarked for redevelopment into a fresh 99-year leasehold commercial development.
- The current additional existing capital commitment (excluding the development cost which is to be finalised) is comprised of SGD476 million, encompassing land betterment premium, lease top-up premium, and transaction expenses.
- Upon the successful redevelopment of Shenton House, it is the intention that Shenton 101 shall hold the redeveloped property as an investment property.
The good faith intention of LYS is not to make a personal gain arising from the Proposal. As such, the Consideration is to include the initial cost of investment of equity in Shenton 101 and the cost incurred by Shenton 101 for the acquisition of Shenton House and any upfront costs incurred by Shenton 101 such as consultants’ fees and expenses and tender, application and approval costs as well as cost of finance.
The Proposal is valid for a period of 4 months from the date of the Proposal Letter and the validity period may be extended for an additional period of 2 months.
LYS and Dato’ Lee Yeow Chor (“DLYC”) are major shareholders of IOIPG through their substantial shareholdings held in Vertical Capacity Sdn. Bhd., a major shareholder of IOIPG. The implementation of the Proposal would therefore be deemed a related party transaction.
Both LYS and DLYC have abstained and will continue to abstain from all Board deliberations and voting in respect of the Proposal.
