Proposed Divestment of Ventura Development by SembCorp Industries

Singapore, Oct 15, 1999

SembCorp Industries Ltd (SembCorp Industries) announces today that its subsidiaries, Singapore Technologies Industrial Corporation Ltd, SembCorp Construction Pte Ltd and SAFE Enterprises Pte Ltd, have entered into a conditional sale and purchase agreement with a wholly-owned subsidiary (the Purchaser) of Somerset Holdings Limited (Somerset), to sell their collective equity interests of 60 per cent. in the capital of Ventura Development Pte Ltd (Ventura) amounting in aggregate to 24 million ordinary shares of $1 each (the Sale Shares) to the Purchaser (the Transaction).

Ventura is the owner of the retail-cum-office complex, Junction 8, located in Bishan Place (the Property). It also manages, operates and leases the Property.

Each of the three subsidiaries of SembCorp Industries holds a 20 per cent. equity interest or 8 million ordinary shares of $1.00 each in the capital of Ventura while the remaining 40 per cent. of the share capital of Ventura is held by Somerset.

Consideration

The aggregate consideration for the Transaction is $114,699,555.60 or approximately $4.78 for each Sale Share. The consideration will be satisfied in cash.

The aggregate consideration for the Transaction is based on the audited net tangible asset (NTA) of Ventura as at September 30, 1999, adjusted for the following:
(1) revaluation surplus in relation to the Property. The revaluation surplus arises from the valuation of the Property at $238 million, which is the average of the independent valuations of the Property conducted by Jones Lang LaSalle for the Independent Directors of SembCorp Industries and CB Richard Ellis for the independent directors of Somerset; and
(2) the profit forecast of Ventura from October 1, 1999 to November 30, 1999. If the Transaction is approved, the Sale Shares will be sold with all rights attaching thereto as at November 30, 1999.

Rationale for the Transaction

Since its formation in October 1998, SembCorp Industries had carried out a programme to focus on its three core businesses of Infrastructure, Marine Engineering and Information Technology. Part of this reorganisation involved the divestment of non-core operations and businesses. The Transaction is therefore the outworking of SembCorp Industries' general policy to divest its non-core assets.

Financial Effects

For illustrative purposes only, based on the unaudited financial statements of SembCorp Industries and Ventura for the six months ended June 30, 1999 and the SembCorp Industries shares as at June 30, 1999, assuming that the Transaction was effected on January 1, 1999, the proforma consolidated earnings per SembCorp Industries share would have been 3.88 cents instead of 3.79 cents due primarily to the realisation of unrealised profits (which was previously eliminated) attributable to the construction of the Property by SembCorp Construction. The proforma NTA per SembCorp Industries share would have been 61.54 cents instead of 59.79 cents due primarily to the extraordinary gain arising from the disposal of the Sale Shares.

The Transaction will result in an extraordinary gain of $21.1 million to the SembCorp Industries Group to be taken up in 1999.

Approval

The Transaction is conditional, inter alia, on the approval of shareholders of SembCorp Industries and shareholders of Somerset.

Temasek Holdings (Private) Limited (Temasek) and Singapore Technologies Pte Ltd (STPL) are substantial shareholders of SembCorp Industries, with direct shareholdings of 13.43 per cent. and 44.41 per cent. respectively. STPL is also a substantial shareholder of Somerset, with a deemed interest of 58.73 per cent. in the capital of Somerset. Accordingly, the Transaction is an interested person transaction pursuant to Chapter 9A of the Listing Manual of the Stock Exchange of Singapore Limited. Temasek and STPL will therefore abstain from voting in respect of their respective shareholdings in SembCorp Industries at the extraordinary general meeting (EGM) of the shareholders of the Company to be convened to approve the Transaction.

Citicorp Investment Bank (Singapore) Limited has been appointed as the independent financial advisor to the Independent Directors for SembCorp Industries for the Transaction.

A circular containing, inter alia, details of the Transaction, the opinion of the Audit Committee of SembCorp Industries, the advice of the independent financial adviser and convening the EGM will despatched to the shareholders of SembCorp Industries in due course.

By Order of the Board
Linda Hoon Siew Kin (Ms)
Group Company Secretary
SembCorp Industries Ltd

October 15, 1999

For press and analyst enquiries, please call
Chow Hung Hoeng (Ms)
Group Corporate Relations
Telephone Number: 731-1729
Fax No.: 738-4904
Email: chowhh@sembcorp.com.sg

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