BT : OUE unveils note issue; Lippo plans placement

Business Times - 01 Jun 2010

OUE unveils note issue; Lippo plans placement

Property firm plans acquisitions from $200m note sale

By UMA SHANKARI

INDONESIA'S Lippo Group is selling an undisclosed number of its shares in property group Overseas Union Enterprise (OUE), OUE said yesterday.

OUE is also planning to issue up to $200 million in convertible notes due 2015. The property group said that net proceeds from the sale of the notes - which are convertible into new ordinary shares - will be used to buy hospitality, retail, commercial and/or residential land sites or properties for development in Singapore.

'We have recently identified a property in Singapore that we are considering for our portfolio. The property is an office tower complex in the CBD (central business district) area which we believe is suitable for redevelopment,' said OUE.

The proposed acquisition and development will be financed by both internal resources and external borrowings, the company said.

OUE also said that it is looking to start a residential property business. Right now, it has one residential site - Twin Peaks, a project at the site of the former The Grangeford - in its portfolio. The project is expected to be launched sometime this month.

In the same series of filings to the Singapore Exchange, OUE also announced a planned vendor share placement. Controlling shareholder Lippo now has an indirect interest of 51.19 per cent in the company. It also holds 37.32 per cent of OUE's shares through Golden Concord Asia, which will sell an undisclosed number of its shares in a placement.

Lippo paid $957 million to buy Malaysian tycoon Ananda Krishnan's stake in the Singapore-listed OUE in March. This gave Lippo sole control of the property group. The move came following reports that ties between Lippo president Stephen Riady and Mr Krishnan were strained and that there were disagreements over the management of OUE.

Mr Riady, who also became OUE's executive chairman, told BT in an interview last month that OUE will be Lippo's Singapore flagship. His aim is to have 50 per cent of OUE's bottom line come from recurrent income and get development profit to make up the remaining half. OUE has almost no development profit now, Mr Riady said then.

Analysts said that the convertible note issue is probably aimed at funding future acquisitions of residential land.

'They (OUE) have publicly said that they want more development profits. To achieve this, they will first need to buy more land,' said an analyst with a foreign bank here.

The issue size and pricing will be determined after a book-building exercise, OUE said. The convertible notes will be offered to institutional or accredited investors in Singapore, qualified institutional buyers in the United States and also eligible investors outside the US.

OUE shares lost two cents to close at $18.98 yesterday.

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