Alset International, on Dec 10, announced that it has proposed to dispose of its stake in American Home REIT to its controlling shareholder, Alset Inc., for a total consideration of US$26.3 million ($35.6 million).
Alset Inc. owns some 85.43% in Catalist-listed Alset International.
The REIT is owned by Alset EHome, an indirect 99.99%-owned subsidiary of Alset International.
American Home REIT, which is in the business of the rental of real estates in the US, has an issued and paid-up share capital of US$2,567 comprising 2,567,358 shares. It also has an authorised capital of 250,000,000 shares, each with a par value of 0.1 US cent.
The REIT currently owns four freehold properties in the US state of Texas.
According to the statement released by Alset International, the proposed disposal is part of the company’s capital recycling plan to unlock and recognise the value of the real estate that could be redeployed to grow its business.
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The proceeds will also provide both the company and Alset EHome the “financial capability to undertake property development projects” as well as the expansion of Alset International’s existing business without the need for external financing in the future.
Of the total consideration sum, US$13.9 million, which is owed by Alset International to Alset Inc., will be offset. Another US$1 million will be paid in cash and the remaining US$11.4 million will be paid through the issuance of a promissory note.
The note comes with an annual interest rate of 7.20%.
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According to Alset International, the consideration sum represents a deficit of around US$1.2 million over the book value of the REIT’s shares, resulting in a loss of the same amount upon its disposal on a fully diluted basis.
As the proposed disposal has a value of more than 5% of Alset International’s latest net tangible asset (NTA), it constitutes an interested person transaction (IPT) under the SGX-ST’s Catalist rules.
Shares in Alset International closed at 3.6 cents on Dec 9.
