Rowsley makes move to be property player

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http://www.straitstimes.com/archive/saturday/premium/money/story/rowsley-makes-move-be-property-player-20121222

Rowsley makes move to be property player

Peter Lim investment firm to acquire RSP Architects, 9.23ha Iskandar plot

Published on Dec 22, 2012

By Esther Teo


AN INVESTMENT holding company controlled by billionaire Peter Lim revealed plans for a $581 million deal yesterday that will transform it into a real estate player.

The first step involves Mr Lim's firm Rowsley acquiring RSP Architects Planners & Engineers, which is fronted by prominent architect and businessman Albert Hong, for up to $223 million.

This will be paid by issuing Rowsley shares at 15 cents each. That will result in RSP, which has been around for 56 years, being listed on the Singapore Exchange (SGX) via its link with Rowsley.

RSP will be one of only two listed building design and engineering practices here. The other is Surbana, of which CapitaLand owns 40 per cent.

In the second part of the strategy outlined yesterday, Rowsley said it has entered into an agreement with Vantage Bay to buy 9.23ha of land in Johor's Iskandar, for $358 million.

Vantage Bay is a joint venture company in which the Johor royal family holds 30 per cent and Mr Lim the rest.

Mr Lim had earlier announced plans to develop the plot into a mixed-use township with shopping, entertainment and residential elements. It will also have hotel, commercial and office components. The entire project will have a gross floor area of at least 10 million sq ft.

The acquisition price works out to RM82 (S$33) per sq ft per plot ratio. The gross development value of the project is estimated to be about $3 billion.

Both agreements are subject to due diligence and further definitive agreements, said Rowsley at a briefing yesterday.

RSP's chairman, Mr Hong, said that "through Rowsley, RSP will have a strong pipeline of design and engineering projects, further strengthening our regional practice which is already one of the biggest in Asia".

"If the deal goes through, RSP will continue to be run by its existing management. There will be little change operationally."

RSP managing director Lai Huen Poh added that the deal will "enlarge the long-term earnings of RSP" and is a synergistic one.

Rowsley will eventually divest its stakes in firms like EpiCentre and FJ Benjamin to focus on its core real estate business, added executive chairman Ho Tatkin.

"(RSP's) expertise and solid track record in town planning, urban design, architecture... will enable Rowsley to get up to speed on its development plans in Malaysia," he added. "(But) this will not be our only project."

If both agreements go through, Rowsley will give existing shareholders a free bonus issue of two warrants for every one share.

Each warrant will have an exercise price of 18 cents a share, the firm said in a statement.

Mr Hong revealed that he had consulted Mr Lim - a friend for more than 20 years - in 1995 when RSP attempted a public listing. SGX rejected RSP's application. Mr Lim will remain the biggest shareholder with an effective stake of 40 per cent of the enlarged share capital of Rowsley.

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http://www.businesstimes.com.sg/archive/saturday/premium/top-stories/rowsley-two-deals-worth-581m-20121222

Published December 22, 2012

Rowsley in two deals worth up to $581m

One involves a reverse takeover deal with the owners of RSP and another the purchase of land in Iskandar

By ong chor hao


INVESTMENT firm Rowsley, controlled by billionaire Peter Lim, is set to transform itself into a real estate player, after announcing two deals worth up to $581 million that will see it divest its current holdings if they go through.

Rowsley entered into non-binding term sheets yesterday in a reverse takeover (RTO) deal to acquire RSP Architects Planners & Engineers for up to $223 million, as well as to purchase 9.23 hectares of land in Iskandar, Johor for $358 million from Malaysia's Vantage Bay Sdn Bhd. The RTO deal will see RSP listed on Singapore Exchange through Rowsley.

Both acquisitions will be satisfied by Rowsley issuing shares to the respective vendors at 15 cents each, and are subject to due diligence and further definitive agreements.

This is a slight premium to the last traded price of 14.1 cents. The counter was halted for trading yesterday.

Said Ho Tat Kin, Rowsley's executive chairman: "The proposed transactions, when completed, will create new value for shareholders, transforming Rowsley from an investment holding company into a major real estate player in the fast emerging Iskandar region."

Speaking at a press conference with senior executives from the parties involved, Dr Ho added that the deals will raise Rowsley's profile and generate investor interest.

Rowsley has swung between losses and gains in the previous five financial years. It reported losses in the first two quarters of the current financial year.

In 2007, the company's reverse takeover deal with a China solar company failed to materialise. It was called off after months of delays stemming from the Chinese company's inability to meet certain conditions.

TThrough the RTO deal, RSP will become the second building design and engineering firm to list on Singapore Exchange (SGX). The first was Sabana Shari'ah Compliant Industrial Real Estate Investment Trust.

Dr Ho believes the RSP deal to be mutually beneficial.

The addition of RSP will allow Rowsley to get up to speed with its development plans in Malaysia, he said. Meanwhile, RSP will enjoy a strong pipeline of design and engineering projects from Rowsley.

Albert Hong, chairman of RSP and a noted businessman, said the firm will continue to be run by its current management if the deal goes through.

"There will be little change operationally," he said.

Dr Hong owns 64.5 per cent of the architecture firm. The other shareholders are Lee Kut Cheung and Lai Huen Poh with 12.5 per cent each, as well as Liu Thai Kher and Hud Abu Bakar, who own 7.5 per cent and 3 per cent respectively.

Asked why it chose to list in this manner, Mr Lai, a managing director at RSP, said it was a "synergistic development" given that Rowsley's supply of land in Iskandar would expand its long-term earnings.

Dr Hong said discussions with Mr Lim started sometime this year. RSP and Rowsley clarified that these were at a personal level and that the boards did not know of the possibility of the deal until recently.

Referring to Mr Lim as a friend of over 20 years, Dr Hong shared that he had consulted him over RSP's failed bid to list on SGX in 1995.

For the plot of land in Iskandar, Rowsley will purchase it from Vantage Bay, a joint venture 70 per cent owned by Mr Lim. The Johor royal family owns the remaining stake.

Ho Kiam Kheong, CEO of Best Blend, the special vehicle for the venture, said the price paid works out to about RM82 ($33) per square foot per plot ratio. The land has a gross floor area of at least 10 million square feet.

It will be developed as an integrated mixed-use township comprising malls, homes and offices, and sits just a few hundred metres from the new customs building in Johor.

The land being sold is part of a bigger plot owned by Vantage Bay. The remaining area will be the site of a medical hub.

This is Mr Lim's second development in Iskandar. He is also building a motorsports hub in another part of Iskandar near the Second Link with Khazanah-backed UEM Land.

Should the deals go through, Rowsley will issue two free warrants for each share for existing shareholders, at a strike price of 18 cents. These can be exercised six months from their listing on SGX, for three years after that.

Chang See Hiang, senior partner at Chang See Hiang & Partners, the legal adviser for the deal, said Rowsley can raise over $350 million if all the warrants are exercised.

He expects up to six weeks for definitive agreements to emerge after due diligence, and up to seven months after that for the deals to be finalised due to the many conditions attached to them.

Both deals will require approval from shareholders and SGX.

Mr Lim is expected to remain the biggest shareholder in Rowsley with around 40 per cent of the stake following the completion of the deals.