IOI Properties Group Berhad decides not to accept the Proposal to Acquire Shenton101 and enters into two Management Agreements for the Redevelopment of ShentonHouse

Press Release: IOI Properties Group Berhad decides not to accept the Proposal to Acquire Shenton 101 and enters into two Management Agreements for the Redevelopment of Shenton House

Putrajaya, 28 August 2024 – IOI Properties Group Berhad (IOI 置业集团, Stock code: 5249) announced today that its Board of Directors (“Board”) has decided not to accept the offer by its Group Chief Executive Officer, Lee Yeow Seng (“LYS”) to acquire Shenton 101 Pte Ltd (“Shenton 101”), for the redevelopment of “Shenton House”, a commercial property that is located at 3 Shenton Way, 068805 Singapore (“Shenton House”) (“Proposal”).

The Board (save for LYS and Dato’ Lee Yeow Chor, who have continued to abstain on all deliberations) is of the opinion that the acceptance of the Proposal would not be in the best interest of IOIPG at this juncture after taking into consideration, inter-alia, the Group’s existing investments/projects in Singapore, namely IOI Central Boulevard Towers, a premium grade A office twin towers of 1.29 million square feet of net lettable area and the soon to be launched W Residences – Marina View, a 683-unit residential development, as well as, the proposed 350- room luxury hotel, W Singapore – Marina View and the ongoing capital commitments of IOIPG Group following the recent RM1.21 billion acquisitions of the 150-room W Kuala Lumpur, the 199-room Courtyard by Marriott Penang, the freehold land in Pantai Kok, Langkawi Island and Tropicana Gardens Mall, Petaling Jaya with 1.05 million square feet of net lettable area. Other consideration was the additional funding that the Group may have to take on-board to finance the acquisition and redevelopment of Shenton House if the Proposal was to be undertaken. In light of the decision of not accepting the Proposal, and to address and mitigate the potential conflict of interest situation arising from the role of LYS in the redevelopment of Shenton House through Shenton 101, which may potentially interfere with or be in conflict with the interest of the Company as the Group is also involved in the similar business of property development, property investment and hospitality in Singapore (“Potential COI”), IOIPG through its subsidiaries have entered into two management agreements with Shenton 101 on 28 August 2024, namely;

i. Project Management Agreement with Multi Wealth (Singapore) Pte Ltd (“Multi Wealth”), an indirect 99.9% owned subsidiary of IOIPG, as the sole and exclusive project manager with respect to the redevelopment of all those 204 strata units and common property under the Management Corporation Strata Title Plan No. 637 in the development known as “Shenton House” located in the Republic of Singapore and bearing the title details of Lot No. TS30-79K, comprised in the Certificate of Title Volume 59 Folio 133 (collectively, the “Property”) (“Project”) and to manage and carry out the implementation of the Project; and

ii. Property Management Agreement with Wealthy Link Pte Ltd (“Wealthy Link”), a wholly-
owned subsidiary of IOIPG, as the sole and exclusive property manager of the above said Property.
(Collectively to be defined as “Management Agreements”).

The terms of the Management Agreements provide the IOIPG Group with the ability to direct the manner of the development of the Property in a way which manages potential competition between the businesses of the IOIPG Group and Shenton 101 and will form the basis of a governance structure to manage the Potential COI, notwithstanding that the IOIPG Group does not hold any equity interest in Shenton 101.

Multi Wealth and Wealthy Link have jointly appointed a global accounting firm based in Singapore (“Third Party Adviser”) to perform benchmarking analysis of comparable financial terms for the Management Agreements in Singapore. Third Party Adviser is of the opinion that the Management Agreements are on normal commercial terms and are not prejudicial to the interests of Multi Wealth and Wealthy Link respectively.

The Management Agreements also grants the IOIPG Group with a right of first refusal to have the priority right to acquire or match any third party offer if (i) Shenton 101 were to seek to dispose of any part of the Property (including any developed units/properties) or (ii) LYS were to seek to dispose of any part of the equity interest held by him in Shenton 101 or (iii) Shenton 101 or LYS were to enter into any joint venture or joint development or other disposal or transfer arrangements. The right of first refusal is valid throughout the redevelopment period of Shenton House (which is anticipated to end by the first quarter of 2031 based on the current redevelopment schedule) or a period of 7 years after the date of the Management Agreements, whichever is the later.

The entry into the Management Agreements is deemed to be a related party transaction pursuant to Paragraph 10.08 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad in view of the interests of certain directors and major shareholders of the Company in the transaction. The entry by Wealthy Link and Multi Wealth into the Management Agreements does not however give rise to the need for the Company to obtain its shareholders’ approval of the transaction in a general meeting, as the percentage ratio of the transaction is less than 5%.

In line with good corporate governance practice and the provisions of section 218 of the Companies Act 2016, IOIPG intends at the request of LYS to convene a general meeting for shareholders which will be announced at a later date, to consent to the conflict of interest position arising by the virtue of LYS holding an interest in Shenton 101.

— end of press release —

Please share with people you care. You can get daily updates too.

Sign up for daily investment news updates (FREE since Nov 2013 and FOREVER). 

Alternatively, Follow me on Telegram here.

Please LIKE kopiandproperty.com FB page to get daily updates about the property market beyond kopiandproperty.com articles.