DRB-Hicom calls off sale of The Verge

DRB-Hicom calls off sale of The Verge

More than four months after it announced the proposed sale of The Verge mall in Little India, DRB-Hicom has officially called off the deal.

The termination was due to the inability of the buyer, a Singapore-incorporated vehicle controlled by Keith Tang, to fulfil its contractual obligations on the agreed completion date, DRB-Hicom said in a regulatory filing with Bursa Malaysia on Thursday.

The move did not come as a surprise to industry watchers here. Some said Mr Tang's company, Evolutyon Real Estate Investment Holding, may not have found acceptable funding for the deal.

The price Evolutyon had agreed to pay for The Verge under the conditional deal announced last Dec 21 was also believed to be not attractive enough for potential partners to join a consortium for the purchase and redevelopment of The Verge, according to industry observers.

The total indicative sale consideration was S$317 million for 100 per cent equity interest in the vehicle that owns the property; this took into account, among other things, the agreed value of The Verge at about S$295.60 million.

Talk in industry circles is that Evolutyon did not pay a deposit for the proposed purchase.

Mr Tang is a grandson of CK Tang founder Tang Choon Keng.

In its statement on Thursday, DRB-Hicom said: ". . . the vendors have sent a termination notice . . . informing the purchaser that the SSA (share sale agreement) has today been officially terminated".

DRB-Hicom did not give further details.

Sources say that Evolutyon was originally supposed to complete the purchase by the end of March this year. However, following several extensions of this completion date granted by DRB-Hicom to Evolutyon, the latest completion deadline was to have been the end of April. When Evolutyon did not meet this deadline, it was informed that there will be no further extensions on the completion date.

The transaction was to have taken place through a sale of shares in Corwin Holding, which owns The Verge, to Evolutyon.

DRB-Hicom's indirect fully owned subsidiary Hicom Megah owns about 90 per cent of Corwin, with retailer Mohamed Mustafa and Samsuddin Co and BI Distributors (owned by Mustafa boss Mustaq Ahmad and his wife), holding about 5 per cent each.

The indicative sale consideration of S$317 million was arrived at after taking into account Corwin's audited net assets of about S$55.42 million as at March 31, 2015, audited net profit of around S$30,470 for the year ended March 31, 2015, and unaudited net assets of S$56.14 million as at Nov 30, 2015, and the agreed value of The Verge at around S$295.60 million, which is to be free from encumbrances, and after deducting the relevant expenses for the transaction. This was revealed in DRB-Hicom's filing last December.

In its latest filing on Thursday, the group said: "Arising from the termination, neither party shall owe any further obligations to the other in respect of the SSA, save and except as otherwise provided for in the SSA. The vendors are of the view that the purchaser has no legal recourse against the vendors.

"The termination is not expected to have any material financial impact on DRB-Hicom's earnings per share and net assets per share of DRB-Hicom."

The Verge is on a site with a balance lease term of about 80 years. The project opened as Tekka Mall in 2003 but found it tough to draw shoppers. In 2009, it was relaunched as The Verge and repositioned as an IT, lifestyle, and food and beverage Hub. Today the most famous tenant at the mall is Sheng Siong Supermarket.

The project was developed on a 99-year-leasehold site zoned for white use that Hicom Holdings group - before it became DRB-Hicom - clinched at an Urban Redevelopment Authority tender in 1996 for S$84 million.


This article was first published on May 6, 2016.
Get The Business Times for more stories.

More about

Purchase this article for republication.

BRANDINSIDER

SPONSORED

Most Read

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.