CITY Developments Limited is acquiring a 51.01 per cent stake in Chinese real estate developer Sincere Property Group for RMB4.39 billion , which will enable it to expand its footprint in China.
As part of the transaction, a call option will also be granted to CDL, which it can exercise to purchase an additional 9 per cent interest in Sincere Property for RMB0.77 billion at the same entry valuation. If exercised, it will allow CDL to acquire a 60.01 per cent stake in Sincere for a total of RMB5.16 billion.
“Given the adverse impact of the Covid-19 crisis and the global uncertainty, CDL has taken the opportunity to negotiate new terms for its investment into Sincere Property, which are significantly improved over the original investment terms announced last year,” said CDL in a statement to the Singapore Exchange after the market closed on Wednesday.
CDL had announced in May last year that it would acquire a 24-per-cent stake in Sincere by investing RMB5.5 billion, which would comprise an equity investment and extending interest-bearing loans. The investment was to be split equally into two tranches, the first being a four-year interest-bearing loan of RMB2.75 billion, part of which would be converted into equity. The second tranche of RMB2.75 billion was to have been invested once certain conditions were fulfilled.
Sincere will use part of the RMB 4.39 billion to repay a loan previously extended to it by CDL. Once the deal is completed, CDL will hold a joint controlling interest in Sincere through an offshore investment vehicle. Sincere chairman Wu Xu’s stake in Sincere will fall from 60 per cent to 29 per cent; Chinese developer Greenland Holdings Group Co will see its shareholding in Sincere about halve from 40 per cent to 19.99 per cent.