The Board of Directors (“Board”) of IOI Properties Group Berhad (“IOIPG” or “Company”) has on 25 June 2024 received a letter of proposal dated 25 June 2024 (“Proposal Letter”) from Mr Lee Yeow Seng, who is the Group Chief Executive Officer and a substantial shareholder of IOIPG (“LYS”), informing the Board of a proposal for the participation by IOIPG in the joint development of “Shenton House”, a commercial property located at 3 Shenton Way, 068805 Singapore (“Shenton House”).  Shenton 101 Pte Ltd (“Shenton 101”), a company incorporated in Singapore of which the sole shareholder is LYS, has successfully tendered for the collective sale and purchase of Shenton House at a consideration of SGD538 million. Shenton 101 is therefore to carry out the redevelopment of Shenton House, the redevelopment works for which are scheduled to commence at the end of 2025.

Shenton 101’s principal activity is the management of self-owned strata titled property (i.e. management corporation strata title) and thereafter it is intended to be principally involved in the business of property development and property investment. 

LYS has disclosed to IOIPG that his role in the redevelopment of Shenton House through Shenton 101 may potentially interfere with or be in conflict with the interest of IOIPG as IOIPG is also involved in the business of property development and property investment in Singapore. The proposal put forward by LYS for the consideration of the Board involves the proposed acquisition by IOIPG via sale of all or any part of the existing shares in the share capital of Shenton 101 (“Sale Shares”) (“Proposal”) in order to address the potential conflict of interest position and as a means of mitigating the potential conflict of interest situation. The intention of the Proposal is to align the interests of IOIPG with that of Shenton 101 (and LYS as the sole shareholder of Shenton 101).

LYS has emphasised to IOIPG that Shenton 101 is ready and able to proceed with the development planning of Shenton House under the terms of the tender and that Shenton 101 is well on the way to put in place funding to enable it to proceed with the redevelopment and that the reason that LYS is extending the Proposal to IOIPG is to help resolve or address the potential conflict of interest situation.

LYS has informed the Board of the following:

1. Shenton House is located in Singapore’s central business district which spans 3,377 square meters and is zoned as ‘Commercial’ with a gross plot ratio (“GPR”) of 11.2 according to the Urban Redevelopment Authority of Singapore’s Master Plan 2019. The current land lease of Shenton House has approximately 44 years remaining, with the potential to be extended to a fresh 99-year leasehold. Further, according to the Singapore’s central business district incentive scheme, Shenton House is eligible for a 25% bonus gross floor area which can be redeveloped into a mixed-use commercial with residential development or a hotel at the GPR of 14. As such, Shenton House is earmarked for redevelopment into a fresh 99-year leasehold commercial development.
2. The current additional existing capital commitment (excluding the development cost which is to be finalised) is comprised of SGD476 million, encompassing land betterment premium, lease top-up premium, and transaction expenses.
3. Upon the successful redevelopment of Shenton House, it is the intention that Shenton 101 shall hold the redeveloped property as an investment property.

In view that any potential transaction in respect of the Proposal would involve his personal interests and constitute a related party transaction for IOIPG, LYS has proposed that in arriving at the purchase consideration for the Proposal (“Consideration”), it shall be determined based on the actual cost of investment incurred by himself and Shenton 101 as at the date of the acquisition of the Sale Shares multiplied by the equity interest in Shenton 101 to be acquired by IOIPG or an equivalent subscription value for the subscription of new shares in Shenton 101. The good faith intention of LYS is not to make a personal gain arising from the Proposal. As such, the Consideration is to include the initial cost of investment of equity in Shenton 101 and the cost incurred by Shenton 101 for the acquisition of Shenton House and any upfront costs incurred by Shenton 101 such as consultants’ fees and expenses and tender, application and approval costs as well as cost of finance.

The Proposal is valid for a period of 4 months from the date of the Proposal Letter and the validity period may be extended for an additional period of 2 months subject to mutual agreement and provided that a written request for extension is received from IOIPG prior to the expiration of the initial 4 month period. Upon the expiration of the offer period, if no decision is made and no mutual agreement is reached on the terms of the sale and purchase of the Sale Shares, the Proposal shall be automatically considered null and void and no party shall have any obligations in respect of the Proposal Letter.

LYS and Dato’ Lee Yeow Chor (“DLYC”) are major shareholders of IOIPG through their substantial shareholdings held in Vertical Capacity Sdn. Bhd., a major shareholder of IOIPG. The implementation of the Proposal would therefore be deemed a related party transaction under the Main Market Listing Requirements of Bursa Malaysia Securities Berhad in view of the interests of LYS and DLYC.

Both LYS and DLYC have abstained and will continue to abstain from all Board deliberations and voting in respect of the Proposal at all relevant board meetings and on all circular resolutions of the Company pertaining to the Proposal. 

Save as disclosed above, none of the other directors and/or major shareholders of the Company have any interest, direct or indirect, in the Proposal.

The Board (save for LYS and DLYC) will evaluate the Proposal and any other alternatives it may deem fit or expedient to address and/or mitigate the potential conflict of interest situation after appointing the appropriate professional advisers and the Company will make the necessary announcements to Bursa Securities as and when there are any material developments.

This announcement is dated 25 June 2024.