Singapore Corporate News - 1 Apr 2008

Parkway Hldgs to raise $785m with rights issue

PRIVATE hospital operator Parkway Holdings is raising $785.7 million through a proposed seven-for-fifteen rights issue at $2.18 a share.

Net proceeds from the exercise are expected to be about $760.1 million, which will be used to repay short-term debt, finance Asian growth plans, and for working capital.

'If you think in terms of the number of projects we have in the pipeline, we need the funding,' said Parkway Holdings group president and CEO Lim Cheok Peng. 'We are taking this company to a different level in the coming years.'

Late last year, the company said it was taking part in a joint venture to build a greenfield hospital in Mumbai by 2011.

With the construction for the 600-bed hospital starting in three months' time, Parkway is setting aside about $60 million for the project this year.

Over in China, Parkway is also in the process of buying up the remaining 40 per cent of clinic chain owner World Link Group in Shanghai for US$28 million. The acquisition is likely to gain approval from the Chinese authorities by Q3.

Parkway is also planning a new Japanese clinic in the city and exploring other opportunities beyond.

Even its Malaysia business is on an expansion trail. Dr Lim said the group's 40 per cent-owned Pantai Holdings targets to increase the number of beds within its hospitals by 1,000 over the next three to five years.

'For the first phase that is in Bangsar, the big hospital in KL, we are putting aside RM400 million (S$172 million), basically to increase the hospital by 200 beds and also to build a new medical centre for the consultants to be housed in,' said Dr Lim.

'In Penang, Gleneagles Penang is building a new 200-bed extension next to the existing hospital and this is going to cost us about RM100 million to build.'

The group is also preparing to increase 150 beds in Malacca to cope with the rising patient load.

On the home front, it is building its fourth hospital in Singapore, after recently buying a piece of land at Novena Terrace/Irrawaddy Road for a record $1.25 billion.

However, the cost of the land, due on May 20, will be paid for through a combination of drawdown of existing committed credit facilities, project level financing and/or bridging loan, the group said in a statement.

'It is very exciting and at the same time challenging,' remarked Dr Lim. 'But we need to have our pockets full before we can even move out!'

At $2.18 per share, the price of the rights share is about 39.3 per cent lower than the stock's closing price of $3.59 last Friday, and a 30.6 per cent discount to the theoretical ex-rights price of $3.14.

Up to about 360.4 million new shares will be issued. Substantial shareholder and US investment fund TPG Group has also committed to taking up the rest of the rights shares not taken up by existing shareholders.

TPG, which merged with private equity firm Newbridge Capital more than a year ago, holds a 24 per cent interest in Parkway through its family of funds.

Shares of Parkway ended down 39 cents or 10.9 per cent yesterday to close at $3.20.

Vega's stake in Sing Lun now at 71.32%

VEGA Company, which has announced its intention to make a voluntary conditional cash offer for all the shares in Sing Lun, said yesterday the stake now owned or controlled by it and parties acting in concert is 71.32 per cent.

The offer by Vega will be on the basis of 46 cents a share, valuing the company at $119.6 million.

Shares of Sing Lun have risen steadily over the past week following an announcement by Sing Lun that it had been informed that certain parties were in discussions to consider making a general offer.

Yesterday, in response to Vega's intention to make the cash offer, Sing Lun's shares surged to a 52-week high of 45.5 cents before closing 15.4 per cent or six cents up at 45 cents, with 25.67 million shares changing hands for the day.

The share price has now risen 76 per cent since the start of the year. Sing Lun's three largest shareholders have put up irrevocable undertakings to accept the offer.

They are Sing Lun Investments Private Limited; Lee Kwok Kie, its chairman and chief executive; and Mark Lee Kean Phi, its chief operating officer. Collectively, these parties own a 53.48 per cent stake.

Offeror Vega is an investment holding company incorporated in the Cayman Islands. It is a wholly owned subsidiary of HPEF6 (SEA1) Limited, which is in turn wholly owned by The HSBC Private Equity Fund 6 LP.

HPEF6 is an exempted limited partnership focused on making investments in companies operating in the Asia-Pacific region.

Vega intends to make Sing Lun its wholly owned subsidiary and delist the company from the Singapore Exchange once the acquisition is complete.

Vega believes that taking Sing Lun private will allow the contract clothing manufacturer to focus resources on its business operations.

It hopes that with the delisting, Sing Lun will be able to dispense with the expense and management resources required to maintain its status as a listed entity, and gain the management flexibility required to operate with greater speed in the dynamic clothing manufacturing business.

Apart from delisting the company, Vega has no present intention to introduce any major changes to Sing Lun's business, redeploy its fixed assets or discontinue the employment of its employees.

Following the close of the offer, Vega will undertake a comprehensive review of Sing Lun's businesses and fixed assets, to determine an optimal business strategy going forward.

Banyan Tree to close Viet fund by end 2008

SINGAPORE resorts and hotels group Banyan Tree hopes to close a fund aimed at raising up to US$400 million for investments in IndoChina by the end of this year, as market turmoil has boosted investor interest in Asian real estate.

'The response from potential investors has been stronger than we expected given that we're in the midst of a liquidity crunch,' Banyan Tree executive chairman Ho Kwon Ping told Reuters in an interview yesterday.

'There's now an aversion to high-risk, high-return types of financial investments and a correspondingly greater interest in previously unsexy stuff like what we are doing, which is a plain vanilla type of development fund.'

The company, which owns luxury hotels and resorts under the Banyan Tree and Angsana brands, is also planning a China fund next year to raise up to US$700 million to develop over 10 sites across the country, including two in the Tibetan city of Lhasa.

Ho said the company was monitoring the unrest in Tibet before firming up plans for the two new Lhasa projects but added that he does not see business affected at its two existing resorts in neighbouring Yunnan province.

Pokka earnings soar seven-fold

FOOD and beverage group Pokka Corporation (Singapore) has reported a more than seven-fold jump in net profit to $7.0 million for its financial year ended Jan 31, 2008.

The surge in profit attributable to shareholders came as the the group posted a 15.4 per cent jump in total revenue to S$167.9 million. Earnings per share rose to 8.38 cents from 1.15 cents.

Pokka's beverage sales rose 20.5 per cent to $112.9 million, accounting for 67.2 per cent of total revenue. This was helped by the success of its marketing initiatives in Singapore and its export markets.

The company attributed its bottom-line performance to better profit margins and to its double-digit revenue growth, the first in six years.

'The year in review marked a new start for Pokka as we embarked on an organisation-wide programme to build a stronger business model for long-term growth,' said CEO Tatsuo Yoshioka. 'The results show that this programme is starting to pay off as we achieved a strong performance despite competitive conditions in both the beverage and restaurant sectors.'

Pokka's local beverage sales were boosted by enhanced distribution capabilities. It was entrusted with arranging and planning retail shelf-space for non-alcoholic drinks in the outlets of major supermarkets and petrol chains.

The group said it has continued to make inroads in overseas markets, such as the Middle East and Europe, where revenue from beverage sales grew 20.1 per cent to $17.3 million and 13.2 per cent to $11.8 million respectively.

Pokka intends to continue focusing on cost management and marketing strategies to build on 'encouraging' sales growth, and reinforce its foothold in Singapore's beverage industry by leveraging on its strong brand equity and widening distribution channels.

The group is also looking to expand its restaurant portfolio in Hong Kong and Singapore. It spent $1.7 million last December to enlarge its central kitchen in Hong Kong to support up to 30 restaurants.

Said Mr Yoshioka: 'We will focus on strengthening our core beverage and restaurant businesses in Asia and other regions worldwide, while continuing to build a more effective cost structure to optimise returns.'

Keppel wins 34m euro co-gen plant deal

KEPPEL Corp, through Keppel Seghers Belgium, has won a 34 million euro (S$74.8 million) turnkey contract to design and build a waste-to-energy cogeneration plant for a papermill in Sweden.

The group, through Keppel Seghers Holding, is also taking a 22 equity stake in Amotfors Energi, the company that will own the waste-to-energy plant. Its investment in both equity contributions and loans will total $8.1 million.

Keppel Seghers Belgium is the environmental technology division of Keppel Integrated Engineering (KIE), a wholly owned subsidiary of Keppel Corp. Keppel Seghers Holding is the wholly owned Netherlands subsidiary of KIE.

Amotfors Energi has a 20-year contract to supply steam and electricity to a papermill owned by Amotfors Bruk, a wholly owned subsidiary of Nordic Paper.

Nordic is the largest shareholder in Amotfors Energi, with a 37.5 per cent stake. The remainder of the shares are held in equal parts by three financial institutions.

The waste-to-energy plant, to be completed by 2010, will process close to 70,000 tonnes of waste a year to produce steam and electricity for the papermill. Eventually, though, the plant will also supply district heating to neighbouring industries and buildings, Keppel said.

'Waste can be an effective supplementary source of green energy for businesses to tap on so as to reduce their dependency on traditional energy sources,' said Chua Chee Wui, chief executive of KIE.

Keppel Seghers Belgium is responsible for the entire plant, except the civil works.

It will feature proprietary Keppel technology, such as an Air-Cooled Grate, vertical boiler design and semi-dry flue gas cleaning system, which allows energy recovery and ensures that the plant's greenhouse gas emissions surpass EU requirements.