Singapore headquartered Adventus Holdings Limited’s 65 per cent owned subsidiary, Crimson Star Development, has announced that it has reached a deal to acquire the commercial benefits of a residential property development project based in Ho Chi Minh City, Vietnam.
The semi-completed residential project, called VRG Riverview, located at the city’s centre – District 1, has a gross floor area of 47,665 square metres with a land area of 5,192 square metres. It encompasses two blocks with a total of 302 apartments.
Crimson Star has been offered the right to buy the entire share capital of Riverview Company Limited (RCL), a joint venture between Vietnam-incorporated Rubber Real Estate and Construction (RRE) and Vinacon Investment and Development Co Ltd, for $300,000.
RRE will inject the project into RCL, and Vinacon will eventually acquire the entire share capital of the JV.
Other rights for Crimson Star include the payment in advance of the marketing fee for the project of $5.7 million, and profit sharing in accordance to an agreed formula or a lump sum to be determined in due course.
The total consideration for the acquisition of the commercial benefits payable by Crimson Star is S$58.7 million, which will be satisfied by a loan to Vinacon worth S$50.6 million and cash payment of $6 million for the acquisition of the rights.
Crimson Star will lend a sum of S$10.1 million to Vinacon as initial payment for the purchase consideration. Further investments by the Singapore firm, if necessary, will also be made through loans.
Adventus’ share in the purchase consideration will be S$38.2 million, funded by its internal resources, sales proceeds and debt financing to be secured by RCL, while the remaining S$20.5 million will be paid by real estate investor Khua Kian Keong, who is holding the remaining 35 per cent of Crimson Star.
“If debt financing can be secured by RCL, funds from the loan may also be used for the payment of the purchase consideration. The loan may be repaid by the sales proceeds from the sale of the apartment units,” Adventus said in a filing to the Singapore Stock Exchange, adding that the deal was reached on a willing-buyer, willing-seller basis.
The company is of the view that Ho Chi Minh City-based project is a strategic investment, which will add tangible benefit and value to the company. “The project represents the group’s maiden entry into the property business. The directors are of the view that the project will provide an additional income stream to the group and enhance shareholder value,” it said.