Proposed Disposal of Alexandra Technopark and Other ...

FRASER AND NEAVE, LIMITED
(Incorporated in the Republic of Singapore)
(Registration No: 189800001R)
ANNOUNCEMENT
Proposed Disposal of Alexandra Technopark and other Transactions
in relation to Frasers Commercial Trust
1. INTRODUCTION
Fraser and Neave, Limited (“F&N”) wishes to announce that:
1.1 its subsidiary, Frasers Centrepoint Limited (“FCL”), the sponsor of Frasers Commercial Trust
(“FCOT”) has, through FCL’s wholly-owned subsidiary, Orrick Investments Pte Limited
(“Orrick”), today entered into a sale and purchase agreement (the “Sale and Purchase
Agreement”) with British and Malayan Trustees Limited, in its capacity as trustee of FCOT
(the “Trustee”), for the disposal (the “Proposed Disposal”) of a 99-year leasehold interest in
the property known as Alexandra Technopark located at 438A/438B Alexandra Road,
Singapore 119967/119968 (“Alexandra Technopark”) to the Trustee for a consideration of
S$342.5 million (the “Consideration”). The Consideration will be satisfied fully by the
issuance of S$342.5 million of convertible perpetual preferred units in FCOT (“Series A
CPPUs”) to Orrick (or its nominees).
1.2 upon the completion of the Proposed Disposal, Orrick will enter into a master lease
agreement with the Trustee (the “Master Lease Agreement”) in respect of Alexandra
Technopark, pursuant to which the Trustee will grant a master lease to Orrick over Alexandra
Technopark for a period of five years from the date of completion of the Proposed Disposal at
a fixed net rental of S$22.0 million per annum (the “Master Lease”). Upon Orrick and the
Trustee entering into the Master Lease Agreement, FCL will provide an irrevocable
undertaking to the Trustee (the “Master Lease Undertaking”), pursuant to which FCL will,
among others, guarantee the due performance of Orrick’s obligations under the Master Lease
Agreement.
1.3 as announced by Frasers Centrepoint Asset Management (Commercial) Ltd., the manager of
FCOT (the “Manager”) today, FCOT has obtained the approval in-principle letter from
Singapore Exchange Securities Trading Limited (the “SGX-ST”) in connection with the
proposed rights issue of 2,252.0 million new units in FCOT (units in FCOT, “Units” and new
Units, the “Rights Units”) to eligible unitholders on a 3-for-1 rights ratio on a fully
underwritten and renounceable basis (the “Rights Issue”, and together with the Proposed
Disposal, the issue of Series A CPPUs, the Master Lease and the Master Lease Undertaking,
the “Transactions”).
1.4 in connection with the Rights Issue, FCL has, subject to various whitewash resolutions being
passed, today provided an irrevocable undertaking to the lead managers and underwriters for
the Rights Issue, being DBS Bank Ltd, BNP Paribas, Singapore Branch, Cazenove & Co.
(Singapore) Pte. Ltd. (a Standard Chartered group company 1 ) and Oversea-Chinese Banking
Corporation Limited (the “Joint Lead Managers and Underwriters”) and the Manager (the
1 Cazenove & Co. (Singapore) Pte. Limited is a wholly-owned subsidiary of Cazenove Asia Limited and a Standard
Chartered group company. The mark “Cazenove” and marks containing “Cazenove” are trade marks of Cazenove IP
Limited and are used under limited licence. Cazenove Asia Limited, its subsidiaries and affiliated companies are now
subsidiaries or affiliated companies of Standard Chartered Bank (Hong Kong) Limited, and are not affiliated with
JPMorgan Cazenove Limited, Cazenove Inc., or their subsidiaries.
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To demonstrate its commitment and support for FCOT, to enable FCOT to successfully
refinance its maturing debt, F&N, through FCL and the Relevant Subsidiaries, will be subunderwriting
32.7% of the Rights Issue as described above.
F&N believes that the Proposed Disposal is aligned with the interest of F&N’s minority
shareholders as it is in line with F&N’s commitment of delivering and enhancing shareholder
value on a sustainable basis over the long term. Through the Series A CPPUs which are
preferred units, giving the holder preference in terms of distribution and return of capital in the
case of liquidation of FCOT, F&N is able to unlock shareholder’s value, whilst at the same
time, through FCL, participate in and benefit from FCOT’s growth.
F&N believes the Rights Issue to be beneficial to F&N as it will give F&N the opportunity to
acquire Rights Units at an attractive discount of 60.4% to the closing market price of S$0.24
per Unit on 29 June 2009 and a discount of 27.6% to the theoretical ex-rights price of
S$0.131 per Unit.
4. THE PROPOSED DISPOSAL OF ALEXANDRA TECHNOPARK
4.1 Principal Terms of the Sale and Purchase Agreement
The principal terms of the Sale and Purchase Agreement include, among others, the
following:
(i) upon completion of the Proposed Disposal, Orrick will grant to the Trustee a 99-year
lease in respect of Alexandra Technopark commencing on the date of such
completion, which is expected to take place no later than 30 September 2009,
concurrent with the estimated date of issue of the Rights Units;
(ii) the Consideration shall be satisfied in full by the allotment and issue to Orrick (or its
nominees) of the Series A CPPUs on the date of completion of the Proposed
Disposal; and
(iii) upon completion of the Proposed Disposal, the Trustee shall grant to Orrick a master
lease of Alexandra Technopark for a period of five years at an annual net rental of
S$22.0 million. The Master Lease may be renewed for a further term of five years at a
rental and on terms to be mutually agreed upon between Orrick and the Trustee.
4.2 Series A CPPUs
The Consideration will be satisfied in full by the issue of Series A CPPUs by the Manager at
S$1.00 per Series A CPPU to Orrick (or its nominees). The Series A CPPUs shall generally
have no voting rights at meetings of Unitholders, save in certain exceptional circumstances.
The Series A CPPUs shall only be redeemable at the option of the Manager, and shall only
be convertible at the option of the Series A CPPU Holder to Units (“Conversion Units”), each
only after three years from the date of issue of the Series A CPPUs, subject to other terms of
the Series A CPPUs. In respect of the entitlement to participate in the distributions of FCOT
and the assets of FCOT upon liquidation, the Series A CPPUs will rank junior to all debt of
FCOT, pari passu with each other and senior to the Units. Each Series A CPPU shall entitle
the holders of Series A CPPUs to receive a distribution of an amount equivalent to 5.5% per
annum of the issue price of each Series A CPPU, subject to declaration by the Manager
which is at its sole discretion although the terms of the Series A CPPUs includes a dividend
stopper such that no ordinary distribution is payable to Unitholders if any part of the Series A
CPPU distribution is not paid in full during the relevant distribution period.
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In order to address concern that the interest of the minority unitholders of FCOT may be
prejudiced through the Series A CPPUs, FCL has provided an undertaking to the SGX-ST
that it will, subject to the receipt of relevant regulatory approvals, within six months of the date
of issue of the Series A CPPUs, procure that Orrick (or its nominees) offers a maximum of
152.8 million Series A CPPUs for sale to Unitholders (excluding FCL and the Relevant
Subsidiaries) at the same issue price at which Orrick (or its nominees) will be issued the
Series A CPPUs. As a condition of the offers of finance extended to FCOT under the
refinancing facilities, FCL and/or its related companies will be required to hold, whether
directly or indirectly, such aggregate number of Series A CPPUs and Units which shall
constitute not less than 40.0% of the total number of Units in issue from time to time (taking
into account the conversion rights attached to the Series A CPPUs) until repayment of the
facilities.
4.3 Independent Valuation of Alexandra Technopark
The Consideration was arrived at on a willing-buyer and willing-seller basis and was based on
the average of two independent valuations of Alexandra Technopark (the “Appraised Value”)
that were arrived at based on the discounted cash flow and capitalization methods. The table
below sets out the valuations of Alexandra Technopark as at 31 May 2009.
Independent Valuer Open Market Value
(S$ million)
Jones Lang LaSalle Property Consultants Pte Ltd (“JLL”) 340.0
Colliers International Consultancy and Valuation (Singapore) Pte Ltd
(“Colliers”)
345.0
4.4 Excess/Deficit of Proceeds over the Book and Appraised Values of the Properties
The Consideration is based on the Appraised Value and approximates the Book Value of
Alexandra Technopark. However, as the Consideration will be satisfied in full by the issue of
Series A CPPUs to Orrick (or its nominees), there will be no cash proceeds.
4.5 Financial Effects
Assumptions
Assuming that the conditions precedent to the Sale and Purchase Agreement are met or
waived, the net profits attributable to the interest in Alexandra Technopark proposed to be
transferred and the pro forma effects on the earnings and net tangible assets (“NTA”) of F&N
and its subsidiaries (the “F&N Group”) are set out below. The pro forma financial effects
have been prepared based on the audited consolidated financial results of the F&N Group
and the pro forma financial statements for the financial year ended 30 September 2008, are
purely for illustration purposes only and do not reflect the actual financial position of the F&N
Group after completion of the Proposed Disposal. The pro forma financial effects set out
below take into account the effects of the Series A CPPU Issue and the Master Lease
Agreement but do not take into account the FCL Commitment Rights Units and FCL
Proportionate Rights Units which F&N may, through its indirect wholly-owned subsidiaries,
subscribe for under the Rights Issue. However, even assuming that the FCL Commitment
Rights Units and FCL Proportionate Rights Units were fully subscribed for by F&N through its
indirect wholly-owned subsidiaries on 1 October 2007, the subscription for such Rights Units
would not have had a significant financial impact on the F&N Group given that the total issue
price payable for such Rights Units is S$70.0 million, which represents less than 1.5% to the
NTA of the F&N Group for the financial year ended 30 September 2008. Net profit
The net profit (before fair value adjustment, income tax, minority interests and extraordinary
items) attributable to Alexandra Technopark is S$16.6 million.
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NTA
For illustrative purposes only and assuming that the Proposed Disposal had been completed
on 30 September 2008, the pro forma financial effects on the consolidated NTA of the F&N
Group for financial year ended 30 September 2008 are as follows:
Before Proposed Disposal After Proposed Disposal
NTA (S$ million) 4,918.0 4,918.0
NTA per share (S$) 3.54 3.54
Earnings per share
For illustrative purposes only and assuming that the Proposed Disposal had been completed
on 1 October 2007 and taking into account the effects of the Proposed Disposal, the Series A
CPPU Issue and the Master Lease, the pro forma financial effects on the consolidated
earnings of the F&N Group for the financial year ended 30 September 2008 are as follows:
Profit after Tax and
Minority Interest
(before fair value
adjustment and
exceptional
items)(S$ million)
Earnings per share
(before fair value
adjustment and
exceptional items)
(cents)
Before Proposed Disposal After Proposed Disposal
379.0 375.6
27.3 27.1
4.6 Disclosure under Chapter 10 of the Listing Manual
Chapter 10 of the Listing Manual classifies transactions by the F&N Group into (i) nondiscloseable
transactions, (ii) discloseable transactions, (iii) major transactions and (iv) very
substantial acquisitions or reverse takeovers, depending on the size of the relative figures
computed on the following bases:
(a) the net asset value of the assets to be disposed of, compared with the F&N Group’s
net asset value;
(b) the net profits attributable to the assets disposed of, compared with the F&N Group’s
net profits; and
(c) the aggregate value of the consideration received, compared with the F&N Group’s
market capitalization.
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The relative figures for the Acquisition computed on the bases set out above are as follows:
Comparison of: Alexandra
Technopark
Net Asset Value
(S$ million)
Net Profits
(S$ million)
Consideration against the
market capitalization of the F&N
Group
(S$ million)
Notes:
F&N Group Relative
Figure
(%)
342.5 5,283.3 6.5
16.6 664.0 2.5
Consideration: 342.5 The market
capitalization of the
F&N Group:
5,426.0 (1)
(1) The market capitalisation of the F&N Group was based on the closing market and issued share
capital as at 26 June 2009.
As two of the relative figures exceed 5%, the Proposed Disposal is a discloseable Transaction
under Chapter 10 of the Listing Manual. However, as the relative figures do not exceed
20.0%, the Proposed Disposal does not therefore constitute a major transaction as defined in
Chapter 10 of the Listing Manual.
5. Master Lease and Master Lease Undertaking
Orrick will be entering into the Master Lease Agreement in respect of Alexandra Technopark,
pursuant to which the Trustee will grant the Master Lease to Orrick. The Master Lease
Agreement may be renewed for a further term of five years upon the expiry of the initial term
at a rental and on terms to be mutually agreed upon between the Trustee and Orrick.
FCL will enter into the Master Lease Undertaking, pursuant to which FCL will provide the
Master Lease Undertaking to the Trustee to guarantee the due performance by Orrick of its
obligations under the Master Lease Agreement, and indemnify the Trustee against all losses,
damages, costs and expenses which the Trustee may suffer as a result of any breach by
Orrick of any of its obligations under the Master Lease Agreement. In the event of a default by
Orrick in the performance of its obligations or its liabilities under the Master Lease Agreement,
FCL is obliged to perform or procure the performance of such obligations or liabilities.
The maximum aggregate amount of all claims which the Trustee may recover from FCL under
the Master Lease Undertaking (whether pursuant to any default by Orrick under the Master
Lease Agreement or pursuant to any breach by FCL under the Master Lease Undertaking, but
excluding the recovery from FCL of any costs and expenses reasonably incurred by the
Trustee in protecting or enforcing its rights under the Master Lease Undertaking) is S$110.0
million (the “Maximum Claim Amount”).
Such Maximum Claim Amount will be reduced progressively by payment in full of the annual
net rent for each year of the term of the Master Lease, whether payment is made by Orrick or
by FCL under the Master Lease Undertaking.
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6. Right of First Refusal
In order to support the growth potential and development of FCOT and to address potential
conflicts of interest which may arise between FCOT and FCL and its subsidiaries in relation to
the future acquisition and disposal or properties, FCL entered into a right of first refusal
agreement (the “ROFR Agreement”) with the Trustee on 30 June 2009, pursuant to which
FCL granted to the Trustee a right of first refusal over, among others, any proposed offer of
sale to, or offer to sell by, a FCL Entity 4 of a Relevant Asset 5 on the terms of the ROFR
Agreement.
7. FCL Commitment
7.1 To demonstrate its commitment and support for FCOT and the Rights Issue, FCL, which owns
an aggregate indirect interest of 22.2% of the Units in issue as at 26 June 2009, has:
(i) provided the FCL Undertaking to the Joint Lead Managers and Underwriters and the
Manager on 30 June 2009 pursuant to which FCL will, directly and/or indirectly
through one or more of the Relevant Subsidiaries, take up the FCL Proportionate
Rights Units; and
(ii) entered into the FCL Commitment Agreement with the Joint Lead Managers and
Underwriters on 30 June 2009 pursuant to which FCL agrees to subscribe, directly
and/or indirectly through one or more of the Relevant Subsidiaries, for up to 32.7% of
the total number of Rights Units (including the FCL Proportionate Rights Units), to the
extent that they are not validly subscribed for under the Rights Issue, ,
subject to, among others, the Whitewash Resolution being approved.
7.2 Commitment Fee
Pursuant to the FCL Commitment Agreement, the Joint Lead Managers and Underwriters
have agreed to pay to FCL a fee of 2.25% of the Rights Issue Price multiplied by the FCL
Commitment Rights Units comprising 32.7% of the total number of Rights Units under the
Rights Issue less the FCL Proportionate Rights Units (which is equivalent to approximately
S$0.5 million), together with any goods and services tax payable thereon. FCL will not be
receiving any fee in respect of its subscription of the FCL Proportionate Rights Units.
This fee payable to FCL will be payable by the Joint Lead Managers and Underwriters out of
the Underwriting Commission and shall not exceed the Underwriting Commission.
7.3 Whitewash Waiver
On 7 May 2009, the Securities Industry Council granted a waiver of the obligation of FCL and
its concert parties (the “Concert Parties”) to make a mandatory offer under Rule 14 of the
Singapore Code of Take-overs and Mergers should the obligation to do so arise as a result of:
(i) FCL and the Relevant Subsidiaries taking up the FCL Proportionate Rights Units
pursuant to the FCL Undertaking and subscribing for the FCL Commitment Rights
Units pursuant to the FCL Commitment Agreement and, if applicable, applying for
and receiving excess Rights Units pursuant to the Rights Issue; and/or
(ii) the issuance of Conversion Units to Orrick (or its nominees);
4 A “FCL Entity” refers to FCL or any of its subsidiaries excluding Frasers Property (China) Limited.
5 A “Relevant Asset” means any completed income producing property located in the Asia Pacific region used for
commercial purposes, comprising primarily office and/or business space purposes. Where such completed property is
held by a FCL Entity through a single purpose company or entity established solely to own such property (a “SPV”), the
term “Relevant Asset” shall mean the shares or equity interests, as the case may be, in that SPV.
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subject to, among others, the approval at the extraordinary general meeting by Unitholders
other than FCL, the Concert Parties and parties which are not independent of them (the
“Whitewash Resolution”).
Subject to the Whitewash Resolution being passed, in the event that the Rights Issue is not
completed by 15 September 2009 or such later date as the parties may mutually agree, FCL’s
obligations under the FCL Undertaking and the FCL Commitment Agreement will cease
entirely.
8. Moratorium
As required by the Listing Manual, F&N, together with FCL and the Relevant Subsidiaries,
have undertaken to the Joint Lead Managers and Underwriters that, commencing from today,
they shall not do the following:
(i) offer, sell or contract to sell, grant any option to purchase or otherwise grant security
over, create any encumbrance over or otherwise dispose of, or enter into any
transaction (including a derivative transaction) which is designed to, or might
reasonably be expected to, result in the sale or disposition (whether by actual sale or
disposition or effective economic sale or disposition due to cash settlement or
otherwise) of any or all of its effective or direct interests in the Units held by it and/or
the Relevant Subsidiaries as at the date of this announcement together with such
Rights Units which FCL, through the Relevant Subsidiaries, may subscribe for under
the Rights Issue (the “Moratorium Units”) or any part thereof (or any securities
convertible into or exchangeable for Moratorium Units or which carry rights to
subscribe for or purchase Moratorium Units or part thereof);
(ii) deposit any Moratorium Units (or any securities convertible into or exchangeable for
Moratorium Units or which carry rights to subscribe or purchase Moratorium Units or
part thereof) in which they have an effective or direct interest in any depository receipt
facilities, and/or
(iii) make any announcement with respect to any of the foregoing transactions,
other than as required by applicable laws and regulations,
(collectively, the “Lock-up Restrictions”) until 180 days after the date of completion of the
Proposed Disposal.
The Lock-up Restrictions described above do not apply to the transfer of their effective
interest in the Moratorium Units to and between F&N and/or any of its wholly-owned
subsidiaries provided that each such transferee has executed and delivered to the Joint Lead
Managers and Underwriters an undertaking to the reasonable satisfaction of the Joint Lead
Managers and Underwriters to the effect of the restrictions described above, to remain in
effect for the remainder of the moratorium period.
9. OTHER INFORMATION
9.1 Interests of Directors and Controlling Shareholders of F&N
As at 26 June 2009, being the latest practicable date before this announcement is issued (the
“Latest Practicable Date”), Oversea-Chinese Banking Corporation Limited is a controlling
shareholder of F&N and is one of the Joint Lead Managers and Underwriters in relation to the
Rights Issue.
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Save as disclosed above and in the Unitholders’ Circular, none of the Directors or the
controlling shareholders of F&N has an interest, direct or indirect, in the Proposed Disposal,
the subscription of the Series A CPPUs, the Master Lease and the Master Lease
Undertaking.
9.2 Director’s Service Contracts
No person is proposed to be appointed as a director of F&N in connection with the Proposed
Disposal or any of the Transactions.
10. DOCUMENTS FOR INSPECTION
Copies of the following documents are available for inspection during normal business hours
at the registered office of F&N, for a period of 3 months commencing from the date of this
Announcement:
(i) the Sale and Purchase Agreement;
(ii) the Master Lease Agreement;
(iii) the Master Lease Undertaking;
(iv) the FCL Undertaking;
(v) the FCL Commitment Agreement;
(vi) the valuation report on Alexandra Technopark issued by Colliers dated 31 May 2009;
and
(vii) the valuation report on Alexandra Technopark issued by JLL dated 31 May 2009.
BY ORDER OF THE BOARD
Anthony Cheong Fook Seng
Group Company Secretary
30 June 2009
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