United Industrial Corp raises stake in Marina Centre to 77.34% with $675.3 million deal

By Michelle Zhu,

The Edge Singapore

/ EdgeProp Singapore |

April 14, 2019 10:53 PM SGT

United Industrial Corporation (UIC), a subsidiary of UOL Group, is acquiring a further 24.27% stake in its 53.07%-owned indirect subsidiary Marina Centre Private Holdings (MCH) for $485.3 million to be paid in cash.

The acuisition is made via the purchase of shares from the following vendors: 10% from OUE Ltd for $200 million; 10.27% from Finnegan Investments Ltd for $205.3 million; and 4% from Mackmoor Pte Ltd for $80 million.

Additionally, UIC will also acquire a 25% holding in Aquamarina Hotel Private Limited (AHPL), an associated company of MCH and UIC Group, from OUE’s subsidiary Hotel Investment (Marina) for a sum of $190 million.

Marina Centre comprises Marina Square Shopping Mall and the Marina Square hotels, namely: Pan Pacific Singapore, Marina Mandarin Singapore, and the Mandarin Oriental, Singapore (Credit: Samuel Isaac Chua/EdgeProp Singapore)

MCH is a property group with investments in the Marina Square retail and commercial complex, comprising Marina Square Shopping Mall and the Marina Square hotels, namely: Pan Pacific Singapore, Marina Mandarin Singapore, and the Mandarin Oriental, Singapore.

On the other hand, AHPL is 50% owned by MCH and owns the Marina Mandarin Singapore. As at end-Dec 2018, sale shares of AHPL were estimated to have a net asset value (NAV) of $1.52 per share.

Upon completion of the acquisitions, UIC will hold a total 77.34% stake in MCH, with the remaining 22.66% to be held by its holding company UOL Group.

MCH will hold a 75% stake in AHPL, which will become a subsidiary of MCH and an indirect subsidiary of UIC. The remaining 25% of AHPL’s interest are held, and will continue to be held, by UOL’s wholly-owned subsidiary UOL Equity Investments.

With the acquisitions, OUE’s subsidiary Singapore Marina International Hotels has also agreed to cease operating the Marina Mandarin Singapore by end-2019.

"This will also give us an opportunity to rebrand and rename the 575-room hotel,” says Liam Wee Sin, UOL group chief executive in a statement on April 14. UOL’s aggregate interest (direct and deemed) in the issued and paid-up share capital of AHPL, which is an existing indirect subsidiary of UOL, will increase from 75% to 100%. .

The shares of MCH and AHPL will be acquired free from all encumbrances and together with all rights, dividends and entitlements attaching and/or accruing to them from the date of completion of the respective acquisitions, says UIC.

Assuming that the MCH and AHPL acquisitions had been completed by end-Dec 2018, the proforma consolidated NTA of UIC would increase to $6.88 billion from $6.79 billion previously. Proforma earnings per share would have increased to 37.3 cents from 21.9 cents previously had the acquisitions been completed by end-Jan 2018. Meanwhile, UOL Group's proforma consolidated NTA is estimated to increase to $9.532 billion from $9.525 billion, and pro forma earnings per share would increase to 51.92 cents from 51.49 cents previously.

“This transaction gives us a 100% stake in MCH and AHPL,” says Lim Hock San, president and CEO of UIC. Having attained full control of Marina Square Shopping Mall and Marina Mandarin Hotel, UIC together with UOL will have “the opportunity to capitalise on the Marina Centre precinct’s growth potential consistent with our long-term investment strategy,” he adds. MCH continues to have a 100% stake in Pan Pacific Singapore and a 50% interest in Mandarin Oriental Singapore.

“UOL and UIC will jointly explore asset enhancement opportunities to unlock value for the various assets, including possibility of tapping into the Incentive Scheme introduced in the latest Master Plan 2019,” says UOL’s Liam.

Chairman emeritus of United Overseas Bank Wee Cho Yaw is a substantial shareholder of UIC. Wee is a director of UIC, along with his son, Ee Lim and Gwee Lian Kheng, who retired as UOL Group chief executive on Jan 31, 2019.

This story first appeared in TheEdgeSingapore.com on April 13, 2019 and was updated on April 14, 2019.

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