OUE on Tuesday said it has signed a share purchase agreement with Tokyo-listed Itochu Corporation to purchase about 266.6 million shares, or a 6 per cent stake, in OUE Lippo Healthcare (OUELH) for about S$27.7 million in cash, equivalent to S$0.10375 per share.

 

The consideration is about 2.5 times OUELH' s closing price of S$0.041 on Tuesday, which may hint at another move from OUE to support OUELH, after the developer last month agreed to convert S$189.6 million of its shareholder loans to OUELH to perpetual bonds to enable the healthcare unit to reset and be better placed to tap capital markets to fund its future growth.

 

The latest announced share sale is expected to take place before the end of March. Following the transaction, Itochu' s subsidiary Browny Healthcare will have a balance 19.32 per cent in OUELH, while OUE will hold about 70.36 per cent.

 

OUE also signed a new memorandum of understanding with Itochu, undertaking that it will seek to maintain its majority shareholding by not selling its OUELH shares, and will even purchase Browny Healthcare' s shares at fair market value if certain trigger events based on the financial results and operations of OUELH occur from now till December 2025.

 

The put option is also exercisable if an order or a resolution for winding up, judicial management, dissolution or administration of OUELH is made before end-December 2025.

 

The MOU will cease if both sides agree, or if Browny Healthcare ceases to hold at least 19 per cent of OUELH, or if Browny Healthcare sees its stake fall below 15 per cent as a result of it failing to take up its pro-rata proportion of shares in the event of any rights issue undertaken by OUELH.

 

OUE said this transaction " extends the strategic partnership with Itochu" and is in line with the group' s commitment to the longer-term prospects of OUELH' s healthcare business. It will allow OUELH to focus on executing its longer-term business plan with the firm support of its key stakeholders.

 

Itochu first took a strategic stake in OUELH in February 2018 with a placement of 562.5 million new shares. Following a subsequent one-for-one rights issue, it was issued another 562.5 million shares in OUELH, resulting in its current 25.32 per cent stake in OUELH before Tuesday' s announcement.

OUE Limited posted a net loss of S$343.4 million for the year ended Dec 31, 2020, a reversal from the S$255.2 million net profit it reported in FY2019.

 

The property player attributed this to overall net fair-value losses recognised on investment properties of approximately S$435.4 million, as well as impairment losses on property, plant and equipment and intangible assets.

 

In particular, it recorded a S$298.9 million fair-value loss on the disposal of the US Bank Tower in Los Angeles, California. The value was derived from the difference between the sale price and the last reported fair value of US$650 million as at Dec 31, 2019.

 

Revenue shrank 43 per cent to S$530.5 million from S$930.8 million a year ago, with declines across all its segments. The pandemic' s impact was especially felt in the hospitality division, where revenue decreased 64.6 per cent to S$85.5 million on lower room occupancy and banquet sales.

 

Loss per share was 38.18 cents. In FY2019, OUE posted earnings per share of 28.31.

 

OUE is proposing a final cash dividend of one cent per share. In FY2019, it paid out a total dividend of 5 cents per share, comprising a final dividend of one cent and special dividend of 4 cents.