http://www.businesstimes.com.sg/prem...offer-20121221

Published December 21, 2012

Simon Cheong may have to sweeten offer


SINGAPORE property magnate Simon Cheong, best known for selling luxury units at record prices, may have to fork out more money to appease his company's key shareholder and take SC Global Developments Ltd private in a planned $745 million deal.

Mr Cheong, who controls 60 per cent of the company and is chief executive and chairman, faces resistance from Wheelock Properties (Singapore) Ltd, which owns 16 per cent of the firm and recently bought shares just above the tycoon's offer price.

Wheelock has also hired Goldman Sachs to advise on its stake, but sources with direct knowledge of the matter said that the company, controlled by Hong Kong-based group Wheelock and Company Ltd, believes that a much higher price for SC Global is warranted.

Bankers and analysts believe that a counterbid for SC Global is unlikely because Mr Cheong owns a controlling stake in the company.

Wheelock sees the revised net asset value (RNAV) of SC Global at $3 a share or more, one of the sources said, about 50 per cent above SC Global's share price. RNAV is the estimated break-up value of a property firm based on its assets.

The sources declined to be identified as they were not authorised to speak to the media. A spokeswoman for SC Global declined comment.

Mr Cheong, a former investment banker who set up SC Global in 1996, has positioned it as a niche developer with exclusive residential enclaves in a country boasting the world's highest concentration of millionaires. Last year, it sold a 3,000 square foot apartment for a record US$19 million in the prime Orchard Road area.

"If Simon Cheong really wants to privatise SC Global, he has to increase the offer price. Currently, it's pretty unlikely that the other minority shareholders will accept the offer,"said Bryan Go, an analyst at Philip Securities. "The completed assets are worth more than the offer price, but current slow sales are dragging the potential value."

Bosses of Singapore-listed companies are taking their firms private to take advantage of beaten-down prices and cheap financing.

SC Global's shares rose to a five-year high of $2.08 this week following Mr Cheong's offer, which was at a 49 per cent premium to its last traded price.

Mr Cheong said that taking the company private will give it "greater flexibility to manage and plan its residential property development" business, and that SC Global has not tapped capital markets for funds for at least the past six years.

Demand for luxury apartments, a segment in which SC Global competes with Wing Tai Ltd and Ho Bee Investment Ltd, has fallen significantly following a string of measures by the government to cool prices, hitting the shares of developers.

Last December, the government imposed an additional 10 per cent stamp duty on the property value that buyers who were not Singapore citizens or permanent residents had to pay. More measures followed this year. - Reuters