Source : Business Times - 26 Aug 2008
Sale of assets will facilitate cinema operator’s reverse takeover by Transcu
ENG Wah Organization has agreed to sell four of its properties to its founder and controlling shareholder Goh Eng Wah, and his daughter, managing director Goh Min Yen, for $99.48 million.
The cinema operator and film distributor said yesterday that a search by property consultants Jones Lang Lasalle for other buyers had been unsuccessful, likely due to a depressed market environment.
The sale of the four properties to EW.G Pte Ltd, an investment vehicle owned in equal parts by Mr Goh and Ms Goh, will facilitate Eng Wah’s reverse takeover by Singapore-based Japanese biomedical firm Transcu first announced last year, Eng Wah said yesterday.
Disposing of the assets is a key condition for the reverse takeover by Transcu. ‘If the properties are not sold, the reverse takeover will not take place,’ said Eng Wah. And if the reverse takeover falls through, EW.G will not buy the properties, it added.
The property sale is subject to the approval of Eng Wah’s shareholders at a meeting on Sept 10. Both Mr Goh - who has a deemed interest in 70 per cent of Eng Wah’s shares and is also executive chairman of the company - and Ms Goh will abstain from voting on the transaction. That means Eng Wah’s minority shareholders will have the final say on whether the sale takes place.
The four properties left in the portfolio that Eng Wah put up for sale last November are the Jubilee Entertainment Complex in Ang Mo Kio, Toa Payoh Entertainment Centre, Empress Theatre in Clementi and the 16th floor of Orchard Towers. A fifth property, the Mandarin Theatre at Kallang Bahru, was sold in June for $13 million to an outside party.
The search for buyers has proved controversial. Last week, the Securities Investors Association of Singapore (SIAS), which represents retail investors here, called on Eng Wah to be more transparent in the sale of its properties, asking it to ‘ensure that the sale price is maximised’.
SIAS president David Gerald said at the time: ‘In our view, the company must ensure that its assets are sold at a fair price and not at a sub-optimal price to the controlling shareholder.’
Yesterday, Eng Wah was keen to stress that the proposed sale price of the properties to EW.G was based on the value of the assets determined by property consultants Chesterton International and CB Richard Ellis.
Eng Wah said Jones Lang Lasalle’s efforts to sell the properties since it was appointed marketing agent last November had resulted in several offers, but only one property - the Mandarin Theatre - was sold. This was ‘primarily due to what Jones Lang Lasalle believes to be negative market sentiment and a depressed credit environment’, said Eng Wah.
In a separate announcement, the company said independent director Foo Kok Swee has retired. Eng Wah has appointed Christopher Martin George Brown, chief executive of private real estate fund Develica Asia-Pacific and former executive chairman of Jones Lang LaSalle Asia-Pacific, as a new independent director.
Eng Wah has recently disposed of other assets, including the former Crazy Horse cabaret premises and assets, which it sold to club operator St James for $2.75 million earlier this month, and a condominium unit in Kuala Lumpur, which was bought by two of Mr Goh’s nephews for RM525,000 (S$220,271) last week.
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