Keppel Corporation’s Keppel Land Limited has entered into a cooperation framework agreement with Tianjin Pulida Real Estate Construction and Development and Qingdao Yuanjia Real Estate to jointly develop eight plots of land with a total size of some 28.7 hectares located in the eastern part of Tianjin in Tianjin Binhai New Area, in China on April 30.
Tianjin Pulida and Qingdao Yuanjia are both subsidiaries of Hong Kong-listed Sino-Ocean Group Holding.
The agreement was entered into by Keppel Land’s wholly-owned subsidiaries, Changzhou Fushi Real Estate Development and Tianjin Fushi Real Estate Development.
Under the framework agreement, Tianjin Pulida has agreed to pay Changzhou Fushi a total consideration of RMB348 million ($71.6 million) in cash in three instalments for a 51% equity stake in Tianjin Fushi, which owns the eight plots of land.
The final instalment is due in December.
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Tianjin Pulida will also extend loans to Tianjin Fushi to some RMB109.8 million, which will be used to repay existing loans from Changzhou Fushi and its affiliates.
The consideration and loan amount were arrived at on a willing buyer, willing seller basis, and took into account the adjusted net asset value based on the agreed value of the North Island Site attributable to the 51% stake in Tianjin Fushi, which was approximately RMB 348 million as at March 31.
The transfer of the 51% stake to Tianjin Pulida is conditional upon, among others, the full payment of the consideration and the loan amount, as well as the completion of the registration procedure for the change in equity in the Tianjin Fushi and Tianjin Fushi having received a new business licence, which transfer is expected to take effect by December.
Following the completion of the transfer of stake, Changzhou Fushi will reduce its total equity stake in Tianjin Fushi from 100% to 49%. Tianjin Fushi will be an associated company of Keppel Corporation.
Shares in Keppel Corp closed 8 cents lower or 1.5% down at $5.42 on April 30.
