Circular to Unitholders - Suntec REIT

of Suntec REIT’s latest audited NAV. Based on the Audited Financial Statements, the
NAV of Suntec REIT was S$2,163.0 million as at 30 September 2006. Accordingly, if the
value of a transaction which is proposed to be entered into by Suntec REIT with an
interested party is equal to or greater than S$108.2 million, such a transaction would be
subject to Unitholders’ approval. Given the Agreed Consideration of S$941.5 million, the
value of the Acquisition exceeds the said threshold.
The Trust Deed provides that for as long as the Manager is the manager of Suntec REIT
and Cheung Kong and/or Mr Lim Hwee Chiang, John are controlling shareholders of the
Manager, all transactions between Suntec REIT and (i) Cheung Kong, (ii) Mr Lim Hwee
Chiang, John and/or (iii) an associate of Cheung Kong or Mr Lim Hwee Chiang, John
shall be considered as interested person transactions under the Listing Manual.
The Vendor is a direct wholly-owned subsidiary of Cheung Kong and is therefore
considered an associate of Cheung Kong. As such, the Acquisition will constitute an
“interested person transaction” under Chapter 9 of the Listing Manual.
The Vendor is a related corporation of the Manager as they are 100.0% directly and
30.0% indirectly owned by Cheung Kong respectively. As a related corporation of the
Manager, the Vendor is considered to be an “interested party” of Suntec REIT for the
purposes of paragraph 5 of the Property Funds Guidelines. In addition, the Chairman of
the Manager, Mr Chiu Kwok Hung, Justin, is also an executive director of Cheung Kong.
As such, the Acquisition will also constitute an “interested party transaction” under the
Property Funds Guidelines. Accordingly, the Acquisition is subject to Unitholders’
approval under Chapter 9 of the Listing Manual and paragraph 5 of the Property Funds
Guidelines.
As at the Latest Practicable Date, the value of all interested person transactions
between Suntec REIT and Cheung Kong and/or the associates of Cheung Kong for the
current financial year ending 30 September 2007 was approximately S$17.0 million. As
at the Latest Practicable Date, the value of all of Suntec REIT’s interested person
transactions during the current financial year ending 30 September 2007 was
approximately S$22.0 million.
4.4 Advice of the Independent Financial Adviser
The Manager has appointed Ernst & Young Corporate Finance Pte Ltd (the “IFA”) to advise its
Independent Directors in relation to the Acquisition (together with the entry into the Share
Purchase Agreement). A copy of the letter from the IFA to the Independent Directors (the “IFA
Letter”), containing its advice in full, is set out in Appendix F of this Circular and Unitholders are
advised to read the IFA Letter carefully.
Having considered the factors and made the assumptions set out in its letter, and subject to the
qualifications set out therein, the IFA is of the view that the Acquisition together with the entry into
the Share Purchase Agreement are on normal commercial terms and will not be prejudicial to the
interests of Suntec REIT and its minority Unitholders.
The IFA has therefore advised the Independent Directors to recommend that Unitholders vote in
favour of the Acquisition.
4.5 Interests of Directors and Substantial Unitholders
As at the Latest Practicable Date, Mr Chiu Kwok Hung, Justin, is both the Chairman and a
director of the Manager as well as an executive director of Cheung Kong. Mr Ip Tak Chuen,
Edmond is both a director of the Manager and an executive director of Cheung Kong.
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