Singapore Corporate News - 12 Apr 2008

CapitaLand-led group lands $2b property loan

THE largest syndicated residential property development loan ever arranged in Singapore - a huge $1.996 billion - has been issued to the CapitaLand-led consortium that clinched Farrer Court.

The five-year facilities have been fully underwritten by DBS Bank, UOB Asia, Standard Chartered Bank, OCBC and Royal Bank of Scotland.

The proceeds will be used to refinance the acquisition cost of the site and to partly finance the development and construction of a new condo on it.

CapitaLand has a 35 per cent stake in Morganite Pte Ltd, a joint-venture vehicle it set up with Hotel Properties Ltd (HPL), Morgan Stanley Real Estate Special Situations Funds III and Wachovia Development Corporation to acquire Farrer Court for $1.3388 billion - the biggest-ever collective sale in Singapore.

HPL and Morgan Stanley each own 22.5 per cent of Morganite, while Wachovia holds the remaining 20 per cent.

Farrer Court's acquisition was completed on March 10. The consortium plans to build a 36-storey condo designed by Pritzker Architecture Prize winner Zaha Hadid.

The 99-year leasehold project, with about 1,500 units, is expected to be launched next year.

The facility agreement for nearly $2 billion comprises a secured term loan for the land, a revolving credit facility that will be progressively drawn down for the project's construction and bank guarantees.

Stanchart managing director (syndications-origination) Harrison Ong said that the facility agreement has a five-year tenure. When asked about interest rate, he would only say: 'It is reasonable, given the strength of the sponsors, the size of the facility and the location of the project.'

The facilities will be secured by, among other things, a mortgage over the Farrer Court site and a debenture over the assets of Morganite.

In addition, the sponsors - the four shareholders of Morganite - will provide certain project and facility undertakings.

Way paved for Unifiber US$893m pulp mill

UNITED Fiber System (Unifiber) has finally paved the way for the construction of its long held-up US$893 million pulp mill project in Indonesia.

The Singapore-listed forestry, pulp and construction group said yesterday that its wholly owned subsidiary, PT Marga Buana Bumi Mulia (PT MBBM), had on Thursday signed the engineering, procurement and construction (EPC) contract with China MCC20 Construction Co Ltd - the group's new Chinese partner for the project. They also signed a supplier's credit agreement.

Construction work will commence within 90 days of the date of the contract and the mill is expected to be completed within 30 months after the EPC contract's effective date, which will come after some preliminary work on matters such as project scheduling. When completed, the breached hardwood kraft pulp mill in South Kalimantan will have a capacity of 600,000 air-dry tonnes per annum.

'The pulp mill is an integral part of our business strategy. We need to ensure that we get the project off the ground and the mill must be completed in a timely manner,' said Unifiber chief executive Jaka Prasetya.

This contract replaced an earlier intended one with China National Machinery & Equipment Import & Export Corp, which was aborted after being long held up over regulatory clearance by both the Indonesian and the Chinese governments.

MCC20 is now responsible for the design, engineering, construction and procurement of all machinery and equipment required to set up a complete pulp mill in Indonesia for about US$893 million.

Under the supplier's credit agreement, MCC20 will be responsible for financing 75 per cent of the total development costs in the form of a supplier's credit and PT MBBM is responsible for the remaining 25 per cent as advance payment.

MCC20 will provide a 10-year US$670 million credit facility for the project, with an interest of 9 per cent per annum and payable semi-annually. The drawdown of the facility will be made progressively with the construction. Repayment from PT MBBM is due only after 12 months of the completion of the project.

Unifiber said that it is currently procuring the financing for an advance payment of about US$223 million for the development costs that it is responsible for, and has executed non-binding term sheets with two short-listed potential investors.

Meanwhile, Unifiber shares closed 3.5 cents or 11.7 per cent down yesterday at 26.5 cents in what dealers saw as profit-taking. More than 110 million shares changed hands.

'While the news is generally positive, the project will still take time to implement,' said a dealer with a European brokerage. 'Longer-term investors will continue to buy into the stock, such as the Lee Pineapple Co but for speculators, they are happy to make a quick buck and get out.'

Dayen in 500m yuan joint venture deal

DAYEN Environmental has entered a 500 million yuan (S$96.8 million) joint venture with Fuxin City Council in China to build and operate a water treatment plant, pumping stations and a pipeline delivering water to Fuxin City. Dayen will take an 80 per cent stake.

Miyoshi H1 net plunges 59.5% to $2.75m

MIYOSHI Precision's net profit for the six months to end-February fell 59.5 per cent to $2.75 million from a year earlier, due to keen competition and foreign currency exchange losses. Revenue fell 9.7 per cent to $73.8 million.

Jurong Tech, client in dispute over $16m debt

JURONG Technologies Industrial Corp's auditors drew attention to its financial statements for 2007, which included trade receivables of $16 million disputed by a customer. As Jurong Tech is still trying to provide the customer with evidence to substantiate the amount, the auditors said they could not determine if the debt is recoverable.

Li Heng earnings soar 89% to 905m yuan

LI HENG Chemical Fibre Technologies' net profit jumped 89 per cent to 905 million yuan (S$175.3 million) last year. Revenue rose 63 per cent to 2.76 billion yuan.