HG Metal Manufacturing - Proposed Sale and Lease Back of 15 Jurong Port Road Singapore 619119

The board of directors of the Company (“Board”) is pleased to announce that the Company has on 4 December 2012 entered into a conditional sale and purchase agreement (“Sale and Purchase Agreement”) with RBC Investor Services Trust Singapore Limited (in its capacity as trustee of Cambridge Industrial Trust)  (“Purchaser”) in connection with the proposed sale and leaseback arrangements (“Proposed Sale and Leaseback”) for the whole of Lot 2938P Mukim 6 located at 15 Jurong Port Road Singapore 619119
(“Property”) together with the building(s) erected on the Property (“Building”) and the plant, mechanical and electrical equipment, fixtures and fittings relating thereto (“Mechanical and Electrical Equipment”).  


The Property comprises of 2-storey ancillary office building (Block 1), 4 blocks of single-storey workshops (Block 2 to Block 5), a 2-storey ancillary office building with canteen on the 1st storey (Block 7) and a newly completed 4-storey office cum warehouse (Block 6). The Property is currently used by the Company for its business, as an office, manufacturing, processing, fabrication, trading as  well as a warehouse and other use permitted by JTC only.


Based on the unaudited consolidated financial statements (“4Q 2012 Statements”) of the Company and its subsidiaries (“Group”) for the twelve months ended 30 September 2012 (“4Q 2012”), the book value and the net tangible asset value of the Property was S$24,800,000.00. A separate valuation of the Property carried out by Chesterton Suntec International Pte Ltd on its recent instruction to determine the Market Value of the Property on 18 October 2012 valued the Property at S$33,000,000.00. Assuming there is no adjustment to the Purchase Price, the net proceeds from the proposed sale of the Property of about S$42,600,000.00 (after deducting the current estimates of the cost of divestment and expenses) represents an excess of S$17,800,000.00 over the book value of the Property as at 30 September 2012. This, assuming the proposed sale of the Property was completed on 1 October 2012, gives rise to a gain on disposal of approximately S$18,200,000.00.