Chip Eng Seng Corporation, on Dec 13, announced that it is proposing to acquire the remaining 30% of shares it does not own in its joint venture company (JVCo) CES Tropical (Maldives) for US$1.3 million ($1.8 million).
The group’s wholly-owned subsidiary, CES Hotels (Maldives), entered into a sale and purchase agreement (SPA) with Tropical Developments Pte Ltd to acquire all of the latter’s shares in CES Tropical (Maldives).
The sale shares represent 30% of the total issued share capital in CES Tropical (Maldives). The remaining 70% is already owned by CES Hotels (Maldives).
CES Tropical (Maldives), in turn, holds 99% of the issued share capital of Samarafushi Pvt Ltd (SPL), and SPL owns the leasehold interest in a lagoon located in North Male Atoll, Maldives.
According to Chip Eng Seng, there are plans for the lagoon to be developed into a five-star resort. CES Hotels (Maldives) owns the remaining 1% of the issued capital of SPL.
In its statement, the group revealed that the acquisition will allow the group to have “full control” over the development and construction of the lagoon, as well as oversee the corporate affairs of CES Tropical (Maldives) and SPL.
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It adds that it has “adequate resources” to proceed with the development of the lagoon without a JV partner.
Upon the completion of the acquisition, CES Hotels (Maldives) will take over the shareholders’ loans granted by Tropical Developments to CES Tropical (Maldives) for US$3.0 million for cash. The amount comprising the purchase price of the shares as well as the shareholder loans will be funded from internal cash resources.
Based on the latest unaudited management accounts of CES Tropical (Maldives), the net asset value (NAV) attributed to the sale shares is around US$2.99 million.
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The completion of the acquisition will take place within or around 10 business days from the date of the execution of the SPA.
Shares in Chip Eng Seng closed flat at 75 cents.
