SINGAPORE - Far East Orchard Limited (FEOrchard) has entered into a joint venture implementation agreement with The Straits Trading Company Limited (STC).
Under the agreement, Far East Orchard and The Straits Trading Company will pursue and conduct hospitality management and hospitality-related businesses and invest in hospitality-related real estate through the joint venture company.
FEOrchard has incorporated a new wholly-owned subsidiary named Far East Hospitality Holdings Pte. Ltd. (JVCo) and FEOrchard and STC will hold 70% and 30% shareholdings in JVCo's issued share capital respectively under the joint venture.
Far East Orchard's group chief executive and managing director Mr Lucas Chow said this is a first step in expanding and growing to becoming a regional hospitality management player with a portfolio of distinctive hospitality brands.
"This is also another step towards building a scalable business that is generating recurring profit for the Group," he said.
FEOrchard will also contribute into JVCo, a cash amount of approximately $76.2 million, which is to be paid to STC.
Concurrently, STC will enter into sale and purchase agreements with JVCo or its whollyowned subsidiary to purchase the STC Assets.
The completion of the Business Transfer Agreement and S&P agreements are expected to be on 28 June 2013 or such later date to be agreed by FEOrchard and STC.
Through the proposed JVCo, FEOrchard will be able to significantly expand its hospitality management business beyond Singapore and Malaysia, into Australia and New Zealand, where 11 out of the 13 of STC-managed hotels are situated.