* Chairman, CEO Cheong gets pushback from Wheelock
* Counterbid unlikely given Cheong's controlling stake
* SC Global could face penalties for unsold luxury units
By Anshuman Daga
SINGAPORE, Dec 20 Singapore property magnate
Simon Cheong, best known for selling luxury units at record
prices, may have to fork out more money to appease his company's
key shareholder and take SC Global Developments Ltd
private in a planned S$745 million ($612 million) deal.
Cheong, who controls 60 percent of the company and is chief
executive and chairman, faces resistance from Wheelock
Properties (Singapore) Ltd, which owns 16 percent of
the firm and recently bought shares just above the tycoon's
Wheelock has also hired Goldman Sachs to advise on
its stake, but sources with direct knowledge of the matter said
the company, controlled by Hong Kong-based group Wheelock and
Company Ltd, believes a much higher price for SC
Global is warranted.
Bankers and analysts believe a counterbid for SC Global is
unlikely because Cheong owns a controlling stake in the company.
Wheelock sees the revised net asset value (RNAV) of SC
Global at S$3 a share or more, one of the sources said, about 50
percent above SC Global's share price. RNAV is the estimated
breakup value of a property firm based on its assets.
The sources declined to be identified as they were not
authorised to speak to the media. A spokeswoman for SC Global
Cheong, a former investment banker who set up SC Global in
1996, has positioned it as a niche developer with exclusive
residential enclaves in a country boasting the world's highest
concentration of millionaires. Last year, it sold a 3,000 square
foot apartment for a record $19 million in the prime Orchard
"If Simon Cheong really wants to privatise SC Global, he has
to increase the offer price. Currently, it's pretty unlikely
that the other minority shareholders will accept the offer,"
said Bryan Go, an analyst at Philip Securities. "The completed
assets are worth more than the offer price, but current slow
sales are dragging the potential value."
Bosses of Singapore-listed companies are taking their firms
private to take advantage of beaten-down prices and cheap
SC Global's shares rose to a five-year high of S$2.08 this
week following Cheong's offer, which was at a 49 percent premium
to its last traded price.
Cheong says taking the company private will give it "greater
flexibility to manage and plan its residential property
development" business and SC Global hasn't tapped capital
markets for funds for at least the past six years.
Demand for luxury apartments, a segment in which SC Global
competes with Wing Tai Ltd and Ho Bee Investment Ltd
, has fallen significantly following a string of
measures by the government to cool prices, hitting the shares of
Last December, the government imposed an additional 10
percent stamp duty on the property value that buyers who were
not Singapore citizens or permanent residents had to pay. More
measures followed this year.
"If you look at the amount of intervention from the
government, the high-end homes have been hit most because of the
measures," said Png Poh Soon, head of research at Knight Frank
Demand from foreigners, who used to account for 30 percent
to 35 percent of home purchases in the segment, has fallen
steeply and high-end developers have been left with unsold
Under Singapore's regulations, SC Global could face
penalties for not selling all its new units two years after they
have been completed.
Failure to do so means losing a deposit worth 10 percent of
the land as well as an 8 percent tax on the value of unsold
units in the first year, rising to 24 percent after three years.
($1 = 1.2182 Singapore dollars)
(Additional reporting by Saeed Azhar and Charmian Kok; Editing
by Matt Driskill)