Hotel Plaza to sell Parkroyal for $141m

HOTEL Plaza announced yesterday that it had entered into a conditional sale and purchase agreement to sell its 100 per cent shareholding in Hotel Grand Plaza (Singapore) Pte Ltd (HGP) for a total net cash consideration, excluding shareholder’s loan to be assigned, of approximately $141.2 million. The purchaser is Park Hotel Strategic Investments (PHSI).

HGP owns the Parkroyal on Coleman Street, formerly known as Grand Plaza Parkroyal Hotel, a 10-storey hotel building with 330 rooms and an adjacent shopping arcade.

Hotel Plaza said the transaction will allow it to ‘unlock value on its investment in HGP as well as significantly reduce its gearing level’.

Hotel Plaza expects the transaction to allow it to realise an estimated gain of about $86.6 million or 21.65 cents per share.

For illustration purposes, if this transaction had been effected at the end of 2005, net tangible asset per share of Hotel Plaza would have increased from $1.01 to $1.22. Hotel Plaza’s share price was last traded at $1.35 yesterday.

Hotel Plaza is a subsidiary of property group UOL Group, whose major shareholder is banker Wee Cho Yaw of United Overseas Bank. Hotel Plaza has interests in hotels in Singapore, Malaysia, Myanmar, Australia, China and Vietnam.

PHSI has paid a deposit equivalent to 10 per cent of the consideration, with the balance payable on completion of the transaction, which is scheduled on Dec 28. The consideration was arrived at based on negotiations on a willing-buyer willing-seller basis.

The transaction is conditional upon Hotel Plaza having obtained the approval of its shareholders in a general meeting for the transaction or a dispensation having been obtained from the Singapore Exchange Securities Trading Limited (SGX-ST) for the obtaining of such approval. Hotel Plaza has written to the SGX-ST to seek a waiver from the requirement to seek shareholders’ approval for the transaction.

Singapore’s hotel room rates have been rising on the back of increases in visitor arrivals and hotel occupancy rates. With a brighter outlook for the hotel sector, developers have recently started to show interest in hotel development sites that are being made available for sale through the government’s reserve list system.

Source : Business Times, - 4 Oct 2006