SINGAPORE - EMBATTLED City Harvest Church has borrowed $45 million against its stake in Suntec Singapore International Convention and Exhibition Centre to clear a previous loan it could not pay.
If the church - which has six leaders embroiled in an ongoing high-profile court case - defaults on the steep repayments, it could lose its entire 39 per cent slice of the prime property.
The six-year loan has not come cheap, according to details filed with the Singapore Exchange (SGX) by one of the lenders.
The church is paying 8 per cent annual interest on the $45 million, plus $2.6 million a year for five years in what is described as a front-end fee - a fee levied on a borrower in a commercial loan and usually paid at the start of it.
The interest plus fee works out to an average rate of around 13 per cent annually for the six years of the loan - well above home loan rates of less than 2 per cent.
In dollar terms, it has to pay an average of $5.77 million in interest and other charges every year.
At the end of six years, it will still need to pay back the principal of $45 million. City Harvest can repay the loan earlier if it wishes and save on some interest costs.
The loan was disclosed in SGX announcements filed last month by Freight Links Express Holdings, a Singapore-listed logistics firm that is providing part of the funds. Chief executive Eric Khua told The Straits Times on Tuesday: "It's a very respectable return."
Freight Links has a funds management arm investing in instruments like bonds so the loan is nothing new. It was introduced to the deal by local businessman Henry Wee, who provided the rest of the $45 million.
Mr Khua said neither he nor Mr Wee are members of City Harvest, and that this was a "commercially-driven deal".