Singapore Companies
Published November 11, 2006

OUE mulls over use of proceeds from UOB sale

OVERSEAS Union Enterprise (OUE), which announced late on Thursday that it had completed selling its entire stake in United Overseas Bank (UOB) for $376.9 million, is expected to ponder whether to return some of the money to shareholders while keeping the rest to help fund upcoming projects, market watchers say.

These projects would include redeveloping Overseas Union House at Collyer Quay and substantially boosting retail space at Mandarin Hotel in Orchard Road.

OUE also took part in last month's state tender for a commercial and hotel site at Collyer Quay that includes Clifford Pier and the former Customs Harbour Branch Building.

And if the group ends up winning the tender, it will have to set aside funds for buying the waterfront site and developing it - which could cost well over $100 million, industry observers say.

The redevelopment of Overseas Union House into an 18-storey office tower is slated to begin early next year and cost more than $300 million.

Over in the prime Orchard Road retail belt, OUE is expected to embark on substantial works at Mandarin Hotel, where a multi-level shopping gallery fronting Orchard Road is planned to be built, industry sources say.

'They're planning to give some serious competition to Ngee Ann City,' said a market watcher.

Another major move by OUE was to spend about $212 million last month when it paid UOL Group for the remaining 50 per cent of Clifford Development Pte Ltd, which owns Overseas Union House and Change Alley Aerial Plaza next door.

As of June 30 this year, OUE had about $80.8 million in cash and some $504 million in available-for-sale financial assets - including the 22.3 million UOB shares that it finished selling this week.

OUE sold the UOB shares from Oct 5 to Nov 9 this year, and will reap net proceeds of about $376.4 million from their disposal.

'The company will make an announcement in the future on the use of the net proceeds, after considering the investment requirements of the company and its subsidiaries,' OUE said in its announcement on Thursday night.

OUE will recognise a realised gain of about $162.6 million - or 92.2 cents per share - on the disposal for the current financial year ending Dec 31, 2006.

Trading in the counter has been suspended since July 12 this year after OUE Realty - a Lippo and Usaha Tegas joint venture - and parties acting in concert with it crossed the 90-per cent shareholding level in OUE during a general offer.

OUE said last month that OUE Realty intends to maintain OUE's listing status.

To that end, OUE will work with OUE Realty to raise OUE's free float to at least 10 per cent to meet the Singapore Exchange's listing requirements.