OXLEY HOLDINGS LIMITED (Incorporated in the Republic of Singapore) (Company Registration No G)

Transcription

1 CIRCULAR DATED 3 MAY 2013 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY. If you are in any doubt as to the action that you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. If you have sold or transferred all your ordinary shares in the capital of Oxley Holdings Limited (the Company ), please forward this Circular, the notice of the extraordinary general meeting (the EGM ) of the Company and the attached Proxy Form immediately to the purchaser or transferee or to the bank, stockbroker or agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Circular. OXLEY HOLDINGS LIMITED (Incorporated in the Republic of Singapore) (Company Registration No G) CIRCULAR TO SHAREHOLDERS in relation to (1) PROPOSED ACQUISITION OF THE PROPERTY KNOWN AS 30 STEVENS ROAD, SINGAPORE AND PROPOSED DEVELOPMENT THEREOF; AND (2) PROPOSED EXPANSION OF THE BUSINESS SCOPE OF THE GROUP TO INCLUDE THE HOTEL DEVELOPMENT BUSINESS (AS DEFINED HEREIN). IMPORTANT DATES AND TIMES: Last date and time for lodgment of Proxy Form : 18 May 2013 at a.m. Date and time of EGM : 20 May 2013 at a.m. Place of EGM : Raffles Lounge (Level 2) Raffles Country Club 450 Jalan Ahmad Ibrahim Singapore

2 CONTENTS Page DEFINITIONS... 3 LETTER TO SHAREHOLDERS 1. Introduction Proposed Acquisition and Proposed Development of the Property Proposed Expansion of Business Scope Interests of Directors and Substantial Shareholders Directors RecommendationS Extraordinary General Meeting Action to be taken by Shareholders Directors Responsibility Statement Documents Available for Inspection NOTICE OF EXTRAORDINARY GENERAL MEETING PROXY FORM 2

3 DEFINITIONS In this Circular, the following definitions apply throughout unless otherwise stated:- Board : The board of Directors of the Company for the time being CDP : The Central Depository (Pte) Limited Companies Act : The Companies Act, Chapter 50 of Singapore, as amended from time to time Company : Oxley Holdings Limited Director : A director of the Company for the time being EGM : The extraordinary general meeting of the Company, notice of which is set out on pages 16 to 17 of this Circular EPS : Earnings per share FY : Financial year ended, or as the case may be, ending 30 June Group : The Company and its subsidiaries hotel : Includes a boarding-house, lodging-house, guest-house and any building or premises not being a public institution and containing not less than four rooms or cubicles in which persons are harboured or lodged for hire or reward of any kind and where any domestic service is provided by the owner, lessee, tenant, occupier or manager for the person so harboured or lodged Hotel Development Business : The business comprising development of and investments in hotels for sale or lease or for which the management and operation thereof shall be outsourced, including ownership of hotels, holding of investments in hotels and trading in hotels Latest Practicable Date : 26 April 2013, being the latest practicable date prior to the printing of this Circular Leasehold Property : The leasehold estate for a term of 103 years in the Property commencing on the day immediately after the date of the actual completion of the sale and purchase under the Option Listing Manual : The listing manual of the SGX ST, as may be amended, varied or supplemented from time to time NTA : Net tangible assets Option : The conditional option dated 15 March 2013 granted by the Vendor to the Purchaser for the purchase of the Leasehold Property Property : The property known as 30 Stevens Road, Singapore Proposed Acquisition : The proposed acquisition of the Leasehold Property by the Purchaser from the Vendor on the terms and conditions of the Option 3

4 DEFINITIONS Proposed Development : The proposed development on the Property of two blocks of eightstorey hotels, two blocks of two-storey commercial buildings and one block of four-storey clubhouse with basement pursuant to the Grant of Provisional Permission dated 27 February 2013, or such other development as may be approved by the relevant authorities Proposed Expansion of Business Scope : The proposed expansion of the business scope of the Group to include the Hotel Development Business Purchaser : Oxley Gem Pte. Ltd., a wholly-owned subsidiary of the Company and the proposed purchaser of the Leasehold Property SGX ST : Singapore Exchange Securities Trading Limited Shareholders : Registered holders of Shares, except that where the registered holder is CDP, the term Shareholders shall, in relation to such Shares, mean the persons to whose securities accounts maintained with CDP are credited with the Shares Shares : Ordinary shares in the capital of the Company Substantial Shareholder : A person who has an interest (directly or indirectly) in one or more voting shares in the Company and the total votes attached to that share, or those shares, are not less than 5% of the total votes attached to all the voting shares of the Company URA : Urban Redevelopment Authority Valuers : Colliers International Consultancy & Valuation (Singapore) Pte Ltd Vendor : Exklusiv Resorts Pte Ltd, the vendor of the Leasehold Property S$ and cents : Singapore dollars and cents respectively % or percent : Percentage or per centum The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations. The headings in this Circular are inserted for convenience only and shall be ignored in construing this Circular. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act or any statutory modification thereof and not otherwise defined in this Circular shall have the same meaning assigned to it under the Companies Act or any statutory modification thereof, as the case may be. Any reference to a time of day in this Circular is made by reference to Singapore time unless otherwise stated. Any discrepancies in the tables in this Circular between the sum of listed amounts and the total thereof shown are due to rounding. 4

5 OXLEY HOLDINGS LIMITED (Incorporated in the Republic of Singapore) (Company Registration No G) Directors:- Ching Chiat Kwong (Executive Chairman and Chief Executive Officer) Low See Ching (Liu Shijin) (Non-Executive Director) Ng Weng Sui Harry (Lead Independent Director) Phua Sian Chin (Independent Director) Registered Office:- 50 Raffles Place #11-02 Singapore Land Tower Singapore May 2013 To: The Shareholders of Oxley Holdings Limited Dear Sir/Madam 1. INTRODUCTION 1.1 The Directors are convening the EGM to be held on 20 May 2013 to seek Shareholders approval for the following: the proposed acquisition of the leasehold estate for a term of 103 years in the property known as 30 Stevens Road, Singapore by Oxley Gem Pte. Ltd., a wholly-owned subsidiary of the Company, on the terms and conditions of the conditional option dated 15 March 2013 (the Proposed Acquisition ) and the proposed development on the said property of two blocks of eight-storey hotels, two blocks of two-storey commercial buildings and one block of four-storey clubhouse with basement pursuant to the Grant of Provisional Permission dated 27 February 2013, or such other development as may be approved by the relevant authorities (the Proposed Development ); and the proposed expansion of the business scope of the Group to include the business comprising development of and investments in hotels for sale or lease or for which the management and operation thereof shall be outsourced, including ownership of hotels, holding of investments in hotels and trading in hotels (the Proposed Expansion of Business Scope ). 1.2 The purpose of this Circular is to provide the Shareholders with information on, explain the rationale for, and seek Shareholders approval for the Proposed Acquisition and Proposed Development and the Proposed Expansion of Business Scope at the forthcoming EGM. 2. PROPOSED ACQUISITION AND PROPOSED DEVELOPMENT OF THE PROPERTY 2.1 Background On 15 March 2013, the Purchaser, being Oxley Gem Pte. Ltd., a wholly-owned subsidiary of the Company, was granted the Option to purchase the leasehold estate for a term of 103 years in the Property known as 30 Stevens Road, Singapore, by the Vendor, being Exklusiv Resorts Pte Ltd, at a purchase price of S$318,000,000. The purchase price of S$318,000,000 was arrived at on a willing buyer-willing seller basis after taking into account current market prices of properties in the surrounding area and the Company s assessment of the Property s redevelopment potential. 2.2 Information on the Property The Vendor owns the freehold estate of the Property and pursuant to the Option, the Vendor is carving out a leasehold estate of 103 years and granting the Purchaser an option to purchase the said leasehold estate. The leasehold estate in the Property to be acquired by the Purchaser shall commence on the day immediately after the date of the actual completion of the sale and purchase under the Option. On completion of the sale and purchase of the Leasehold Property, the Vendor 5

6 is required to deliver a lease in the form of an instrument on the agreed terms and the Purchaser would then register the said lease with the Singapore Land Authority. The Leasehold Property is transferable by the Purchaser, provided that the Bonds (as defined in Section 2.4(b) of this Circular) are fully redeemed under the terms of the Option. The Property has a total land area of approximately 18,477 square metres. The Grant of Provisional Permission dated 27 February 2013 has been obtained from the Urban Redevelopment Authority for the proposed development on the Property of two blocks of eight-storey hotels, two blocks of two-storey commercial buildings and one block of four-storey clubhouse with basement. The Provisional Permission is valid for six months from the date of the Grant of Provisional Permission, subject to application to URA for a further extension. Upon the payment of the development charge and the resubmission of the development proposal and site plans addressing all URA s requirements (such as clearance on the traffic impact assessment by the Land Transport Authority), URA may grant the Written Permission for the Proposed Development. The Property is currently occupied by The Pines, a recreational club. It is located on the northern side of Stevens Road, near its junction with Balmoral Park and Anderson Road, and some four kilometres from the City Centre. The immediate locality is a prime residential area comprising mainly upmarket residential apartment/condominium developments, service apartments, hotels, private clubs with a few popular educational institutions nearby. The popular shopping, tourist and entertainment belt of Orchard Road, Raffles Place financial district and the Marina Bay Sands integrated resort are all within a short drive away. Accessibility to other parts of Singapore is enhanced by its close proximity to the Central and Pan Island Expressways and Orchard and Newton MRT stations, all of which are within a short drive away. 2.3 Rationale for the Proposed Acquisition and Proposed Development The Proposed Acquisition and Proposed Development are in line with the Group s existing business strategy to expand into other property market segments. The Group intends to redevelop the Property into a mixed development comprising two blocks of eight-storey hotels, two blocks of two-storey commercial buildings and one block of four-storey clubhouse with basement, or such other development as may be approved by the relevant authorities. Given the location of the Property near to the Orchard Road tourist belt, the Directors believe that the Proposed Acquisition and Proposed Development present a good and rare opportunity for the Group to tap into the hospitality sector. Upon the completion of the Proposed Development, which is expected to be by 31 December 2017, the Group intends to appoint a reputable hotel management group to manage and operate the hotels. The clubhouse is also intended to be leased to a recreational club operator. In this regard, the Vendor, which currently operates The Pines recreational club, has the first right of refusal to lease from the Purchaser the part of the Proposed Development comprising the club facilities at the prevailing market rental. The aforesaid will provide the Group with an additional recurrent revenue stream. The Group currently intends to hold the whole of the Property by itself prior to the completion of the Proposed Development. Upon the completion of the Proposed Development, the Group s current intention is to hold the hotels and clubhouse for recurring income. The Group may offer units in the commercial buildings for sale before or after the completion of the Proposed Development. 2.4 Principal terms of the Option (a) Purchase price The purchase price of S$318,000,000 was arrived at on a willing buyer-willing seller basis after taking into account current market prices of properties in the surrounding area and the Company s assessment of the Property s redevelopment potential. 6

7 Based on the valuation report dated 1 April 2013 and prepared by the Valuers, namely, Colliers International Consultancy & Valuation (Singapore) Pte Ltd, for the Company, the Property is valued at:- (i) (ii) S$318,000,000, as a re-development site with the benefit of the grant of provisional permission for a hotel/commercial/club development with communal facilities at gross plot ratio of 1.6, prior to payment of development charges; and S$1,038,000,000, being the gross development value of a proposed hotel development comprising two eight-storey hotels (734 rooms), two two-storey commercial blocks, one block of clubhouse with communal facilities upon satisfactory completion and issuance of temporary occupation permit and certificate of statutory completion. The development charges for the Proposed Development are expected to amount to approximately S$125,000,000. The gross development value of the Property is the market value of the Proposed Development, assuming full completion, or the likely selling price of the Proposed Development upon full completion. A sum of S$10,000,000 (the Option Fee ) had been paid towards the purchase price upon the grant of the Option, and a further sum of S$21,800,000 will be paid upon the exercise of the Option, which shall be no later than seven working days from the date the Company obtains the approval of the Board and/or the Company s shareholders (if required) for the Proposed Acquisition and Proposed Development (the Approvals ). The balance of the purchase price shall be paid upon completion of the Proposed Acquisition which is scheduled to take place on 1 July 2013 or seven weeks from the date of the exercise of Option, whichever is later or such other extended time as the parties may mutually agree (the Completion Date ). (b) Issue of bonds Part of the consideration of the Proposed Acquisition will be settled by the issue of bonds by the Purchaser to the Vendor. The Purchaser shall issue to the Vendor S$100,000,000 6 per cent. guaranteed bonds due 2015 (the Bonds ) (2015 being the second anniversary of the date of the issue of the Bonds). The Bonds shall be secured by a corporate guarantee given by the Company in favour of the Vendor. The Company considers the interest rate of 6% per annum to be fair, taking into account that the rate is fixed, the Bonds are only secured by the Company s corporate guarantee and the current average prime lending rate of banks and finance companies compiled by the Monetary Authority of Singapore is 5.38% per annum. Interest on the outstanding principal amount of the Bonds shall accrue from the date of the issue of the Bonds and be payable every six months from the date of issue thereof. The Purchaser shall redeem S$50,000,000 of the Bonds at 100% of the principal amount of the Bonds and pay the principal amount, together with all accrued interest thereto, to the Vendor on the first anniversary of the date of the issue of the Bonds. Thereafter, the Purchaser shall redeem the remaining S$50,000,000 at 100% of the principal amount of the Bonds and pay the principal amount, together with all accrued interest thereto, on the maturity date. As the Group s development projects are scheduled to obtain their temporary occupation permits from 2013 to 2015, the Group expects to have sufficient cashflow to fund the redemption of the Bonds in 2014 and

8 (c) Key terms and conditions The key terms of the Proposed Acquisition include the following:- (i) (ii) (iii) title to the Leasehold Property shall be in order, properly deduced and free from encumbrances on completion; the Leasehold Property is sold subject to all restrictive or other covenants and conditions affecting the Leasehold Property; and subject as otherwise provided in the Option, the Purchaser is deemed to have inspected the Leasehold Property on or before the date of the Option and the Purchaser shall buy with full notice in all respect of the actual state and condition of the Leasehold Property as regards access, repair, light, air, drainage and in all other respects and shall take the Leasehold Property as it is and shall not be entitled to make or raise any enquiry, requisition or objection whatsoever in respect thereof, provided that the Purchaser shall have the right to inspect the Leasehold Property at reasonable times with prior notice before the Completion Date. The title searches conducted in respect of the Property do not show any restrictive covenants affecting the Property. However, the Vendor is selling the Leasehold Property subject to covenants and conditions implied by law to the extent that they are not negatived or modified by the lease instrument, and to the covenants and conditions set out in the lease instrument. The Purchaser shall endeavour to procure the Approvals within four months from the date of the Option or such extended time as the parties may mutually agree (the Target Date ). In the event that the Company is unable to obtain the Approvals by the Target Date not due to the Purchaser s or the Company s wilful action, wilful omission or wilful default, the Option shall be null and void and subject to the provisions of the Option, the Vendor shall forthwith refund the Option Fee without interest, compensation or deduction whatsoever to the Purchaser. As at the date of this Circular, the Company has obtained the approval of the Board for the Proposed Acquisition and Proposed Development. 2.5 Funding of the Proposed Acquisition and Proposed Development The Proposed Acquisition and Proposed Development will be funded by internal resources, bank borrowings as well as the Bonds to be issued by the Purchaser to the Vendor (please refer to Section 2.4(b) of this Circular for further details on the Bonds). The total investment in the Proposed Acquisition and Proposed Development is estimated to be approximately S$645 million, comprising land cost of S$318 million, construction cost of S$150 million, development charges of S$125 million and other expenses, such as professional fees, stamp duty and interest expense, of S$52 million. The Group expects to obtain bank financing for 65% to 75% of the total investment amount, excluding other expenses of S$52 million, in accordance with its usual business practice and is in the process of negotiating the financing terms with its bankers. The balance amount will be funded by cashflow from the completion of the Group s development projects which are scheduled to obtain their temporary occupation permits from 2013 to As at 31 December 2012, the Group had cash and cash equivalents of approximately S$154 million. 8

9 For illustration purposes only, the effect of the proposed financing on the Group s gearing as at 30 June 2012 and 31 December 2012 would be as follows: Gearing (1) (times) Based on audited financial statements as at 30 June 2012 and unaudited financial statements as at 31 December 2012 Assuming bank financing of 65% of total investment amount, excluding other expenses of S$52 million and financing from the Bonds issued Assuming bank financing of 75% of total investment amount, excluding other expenses of S$52 million and financing from the Bonds issued As at 30 June 2012 As at 31 December Note:- (1) Gearing is defined as the sum of indebtedness (comprising bank loans, bonds and amounts due to directors, a shareholder and non-controlling interests for advances obtained by the Group for working capital purposes) divided by shareholders equity. Before Proposed Acquisition After Proposed Acquisition NTA (S$ 000) 140, ,230 NTA per share (1) (cents) Financial effects of the Proposed Acquisition (a) NTA Assuming that the Proposed Acquisition had been effected on 30 June 2012 (being the end of the most recent completed financial year), there would be no change in the consolidated NTA of the Group as at 30 June 2012:- Note:- (1) Based on the number of shares of the Company of 1,489,000,000 as at 30 June (b) Profits attributable to owners of the parent, net of tax (S$ 000) Before Proposed Acquisition After Proposed Acquisition 16,903 16,903 (1) EPS (2) (cents) EPS Assuming that the Proposed Acquisition had been effected on 1 July 2011 (being the beginning of the most recent completed financial year), there would be no change in the EPS of the Group for FY2012:- Notes:- (1) The interest costs for funding the Proposed Acquisition will be capitalised as part of cost of development and will not have any impact on the profits attributable to owners of the parent, net of tax. (2) Based on the weighted average number of shares of the Company of 1,489,000,000 for FY

10 (c) Rule 1006(a) Net asset value of assets to be disposed of, compared with the Group s net asset value Rule 1006(b) Net profits attributable to the assets acquired or disposed of, compared with the Group s net profits Rule 1006(c) Aggregate value of the consideration given or received, compared with the Company s market capitalisation (as at 14 March 2013) Rule 1006(d) Number of equity securities issued by the Company as consideration for the acquisition, compared with the number of equity securities previously in issue Not applicable Not applicable 67.5% (1) Not applicable Relative figures under Rule 1006 of the Listing Manual The relative figures computed on the bases set out in Rule 1006 of the Listing Manual in relation to the Proposed Acquisition are as follow:- Note:- (1) Based on the total estimated investment amount of S$645 million and the Company s market capitalisation of S$955.5 million, which is determined by multiplying the number of issued shares of 2,948,219,971 by the weighted average price of the Company s shares transacted on 14 March 2013, being the market day preceding the date of the Option, of S$ per share. 2.7 Shareholders approval As the business of the Group currently comprises the development of residential, industrial and commercial properties, the Group acquires properties for redevelopment from time to time in the ordinary course of its business. However, as the Proposed Development of the Property will include the development of one or more hotels and the Group has not previously undertaken any hotel development, the Company has decided to treat the Proposed Acquisition and Proposed Development as a transaction which is outside the ordinary course of the Group s business and thus a major transaction (as defined in Chapter 10 of the Listing Manual) in view that the relative figure under Rule 1006(c) of the Listing Manual exceeds 20%. Accordingly, the Company has convened the EGM to seek the approval of Shareholders for the Proposed Acquisition and Proposed Development. 3. PROPOSED EXPANSION OF BUSINESS SCOPE 3.1 Background The Group is a property developer specialising in the development of quality residential, commercial and industrial projects. The Group s developments cater to the growing needs of young and trendy home buyers who value quality living and a finer lifestyle, as well as small and medium enterprise owners looking to purchase their own office premises. The Group s property developments are usually located at good strategic areas that are easily accessible and with prominent lifestyle features. The Company s distinctive portfolio of developments includes Oxley Tower, Robinson Square, Parc Somme, Devonshire Residences, Loft@Holland, Loft@Rangoon, Loft@Stevens, Viva Vista, Vibes@ Kovan, Oxley BizHub and Oxley BizHub 2. By leveraging the Group s existing core competencies, the Directors are of the view that the proposed expansion of the business scope of the Group to include the Hotel Development Business will benefit the Group by extending its revenue base and improving its growth prospects. 10

11 3.2 Hotel Development Business The Group s proposed Hotel Development Business will comprise development of and investments in hotels for sale or lease or for which the management and operation thereof shall be outsourced, including ownership of hotels, holding of investments in hotels and trading in hotels. The Proposed Acquisition and Proposed Development will be the Group s foray into the Hotel Development Business. In addition to acquiring land which are zoned for residential, commercial and/or industrial use for the Group s existing business in the development of residential, commercial and industry projects, the Group will look out for opportunities to acquire land which are zoned for hotel developments. Where opportunities arise, the Group may also invest in existing hotels or acquire them for redevelopment. This allows the Group to expand its property portfolio. Save for Mr Ching Chiat Kwong, the Executive Chairman and Chief Executive Officer and controlling shareholder of the Company, who is a shareholder and director of companies which own and/or manage hotels (please refer to section 3.5 of this Circular for further details), none of the Directors or the management of the Group has any experience or expertise in the hospitality industry. As such, the Group plans to rely on reputable hotel chains to manage and operate the hotels that it will own. The hotels are intended to be rated at least 3-star. The revenue received by the Group, which is expected to be based on the room rates and occupancy rates, will provide recurring income for the Group. 3.3 Rationale for Proposed Expansion of Business Scope The Directors believe that the tourism industry will remain one of the key contributors to the Singapore economy. According to the Singapore Department of Statistics, visitor arrivals increased in 2012 by 9.1% on a year-on-year basis. According to the latest available tourism sector performance report issued by the Singapore Tourism Board, the tourism receipts for 2012 were estimated at S$23.0 billion, registering a 3% year-on-year growth, while revenue per available room for 2012 was S$222 representing a 4% year-on-year growth. The average occupancy rate of the hotel industry in Singapore was 86% in In view of the foregoing, the Directors believe that the future prospects for the hotel business are favourable. By undertaking the Hotel Development Business, the Group will be able to leverage its existing competencies and tap into and benefit from this hospitality sector. 3.4 Risk factors relating to the Proposed Expansion of Business Scope To a certain extent, the Proposed Expansion of Business Scope will change the existing risk profile of the Group. Below is a list of identified but by no means exhaustive list of risk factors which are associated with the Hotel Development Business. The list does not include risk factors associated with the property development business in general which are currently faced by the Group in its existing business. Shareholders should consider carefully the following risk factors and all other information contained in this Circular, before deciding on the Proposed Acquisition and Proposed Development and the Proposed Expansion of Business Scope. The following does not include risks unknown to the Group now but which could occur in future, and risks which the Directors currently believe to be immaterial, but which could turn out to be material. Should these risks occur or turn out to be material, they could materially and adversely affect the Group s business, financial condition, results of operations and prospects. The Shareholders should also note that certain of the statements set forth below constitute forward-looking statements that involve risks and uncertainties. (a) The hotel industry is highly competitive Singapore has a highly competitive hotel industry, with each hotel constantly trying to offer better amenities and services at more competitive rates to attract visitors. The level of competition in the Singapore hotel industry is affected by various factors, including changes in economic conditions, both locally and regionally, changes in local and regional populations, the supply and demand for hotel rooms and changes in travel patterns and 11

12 preferences. The Group s competitors may boast closer proximity of their hotel locations to the city centre, where the business and shopping belts are located, and other tourist attractions. Some of the competitors may also offer lower rates, more or better amenities and services and/or special promotions to attract hotel guests. If the efforts of the competitors are successful and the Group s hotels are unable to react promptly to match their services at competitive rates, the results of the Group s Hotel Development Business will be adversely affected. (b) (c) (d) (e) The Group may be affected by a decrease in the demand for hotel rooms The financial performance of the Group s hotels will be affected by the rate of occupancy of the hotel rooms. In the event that there is a decline in the number of visitors to Singapore, the Group s hotel occupancy rates may drop accordingly. A decline in the number of visitors to Singapore may arise due to various reasons such the growth of more attractive destinations for tourists and business travellers other than Singapore or a worldwide decrease in travel resulting from a general downturn in the global economy, fears of terrorism or outbreaks of epidemics. In the event that such a decline occurs, the financial performance and profitability of the Group s Hotel Development Business will be adversely affected. The Group will be reliant on hotel operators for the management and operation of its hotels The Group intends to rely on hotel operators to manage and operate the hotels which the Group will own, under management agreements. It is envisaged that such management agreements will be for fixed terms. In the event that the Group is unable to engage any hotel operator on mutually agreeable and commercially viable terms, the operations and financial performance of the Group s Hotel Development Business will be adversely affected. The Group will be exposed to significant operating risks The Group will be exposed to operating risks common to the hotel industry in its proposed Hotel Development Business. Such risks include oversupply of, and reduction in demand for, rooms due to competition from other hotels or changes in economic conditions, increase in operating costs including utility and labour costs due to inflation and/or other factors and dependence on the tourism industry in Singapore. From time to time, the Singapore government may also release land sites for the development of new hotels to anticipate future increases in visitor arrival. This could lead to an increase in the supply of available rooms. If such anticipated increase in visitor arrival does not materialise, or there is no commensurate increase in the demand for rooms, the profitability and financial performance of the Group s Hotel Development Business will be adversely affected. The Hotel Development Business is subject to changes in the laws and regulations in Singapore The Group will be required to comply with various laws and regulations including the Hotels Act (Chapter 127) and obtain certain licences in order for its hotels to operate. All premises to be used as a hotel have to be registered under the Hotels Act. A hotel-keeper s licence is also required for a person to keep or manage any premises for the purposes of a hotel. Any change in the terms of such licences, or the withdrawal, suspension, non-renewal of or failure of the relevant authorities to grant any of these licences will have an adverse effect on the business and financial performance of the Group s Hotel Development Business. Any breach, infringement of or non-compliance with the relevant applicable laws and regulations may also result in the imposition of penalties or fines, which may affect the financial results of the Hotel Development Business and/or cause harm and damage to the Group s reputation in the industry. There may also be an adverse impact on the Group s Hotel Development Business if there are any changes or modifications to such applicable laws and regulations. 12

13 (f) The Group will be subject to risks associated with developing new hotels New hotel developments are subject to a number of risks, many of which are outside the Group s control, including: (a) (b) (c) market or site deterioration after acquisition of the site; the possibility of discovering previously undetected defects or problems at a site; and the possibility of construction delays or cost overruns due to delayed regulatory approvals, adverse weather, labour or material shortages, work stoppages and the unavailability of construction and/or long-term financing. A period of one to two years normally elapses between the acquisition of the site and the hotel s completion. During the period, travel preferences, political or social conditions of the location or other conditions critical to the success of the hotel may change, such that the hotel may be unable to commence operations or the Group may not be able to achieve its projected returns. In such an event, the business, financial position and results of operations of the Group s Hotel Development Business could be materially and adversely affected. Furthermore, there can be no assurance that the Group will be able to obtain approval from the relevant authorities, including, without limitation, planning approval from the Urban Redevelopment Authority, to develop hotels on sites that the Group acquires. Should this occur, the Group may choose to dispose of the site and the price realised on such disposal will depend on, inter alia, market conditions prevailing at the time of the sale, and may be lower than the price paid by the Group to acquire the site. In such an event, the business, financial position and results of operations of the Group s Hotel Development Business could be materially and adversely affected. 3.5 Potential Conflict of Interests Mr Ching Chiat Kwong, the Executive Chairman and Chief Executive Officer and controlling shareholder of the Company, is the sole shareholder and director of Oxley Blossom Hotel Pte. Ltd. and Oxley Hotel 88 Pte. Ltd. which manage Oxley Blossom Hotel and Oxley Hotel 88, respectively. Oxley Blossom Hotel and Oxley Hotel 88 are owned by third parties. Mr Ching Chiat Kwong and his wife are the shareholders and directors of Oxley Properties Pte. Ltd. which owns Oxley Hotel. Mr Ching Chiat Kwong is the sole shareholder and director of Oxley Hotel Pte. Ltd. which manages Oxley Hotel. Mr Ching Chiat Kwong has been the shareholder and director of the aforesaid companies since prior to the listing of the Company on the SGX ST and the same has been disclosed in the Company s offer document dated 21 October He is not involved in the day-to-day operations of the aforesaid companies. Oxley Blossom Hotel, Oxley Hotel 88 and Oxley Hotel are budget hotels located in the Geylang area. As the Group does not intend to develop or invest in budget hotels and plans to engage reputable hotel chains to manage and operate the hotels that it will own and which are intended to be rated at least 3-star, the Directors believe that there will not be any material conflict of interests resulting from Mr Ching Chiat Kwong having interests in the aforesaid companies and the Group engaging in the Hotel Development Business. Notwithstanding the foregoing, Mr Ching Chiat Kwong has undertaken not to engage in the development of or investments in hotels which are rated 3-star and above, including ownership of, holding of investments in and trading in such hotels, in Singapore. The aforesaid undertaking shall subsist and be effective for so long as the Company is listed on the SGX ST and Mr Ching Chiat Kwong is either a Director or a controlling shareholder of the Company. 13

14 3.6 Shareholders Approval As the Hotel Development Business may change the existing risk profile of the Group, the Company is seeking the approval of Shareholders at the EGM for the Proposed Expansion of Business Scope in order that the Group may undertake the Hotel Development Business as part of its core business. Any future acquisition of properties for the purpose of the Hotel Development Business will then be deemed to be in the ordinary course of business of the Group and not fall under the definition of a transaction under Chapter 10 of the Listing Manual. Directors Direct Interest Number of Shares Deemed Interest % (1) Number of Shares Ching Chiat Kwong (2) 348,839, ,503,592, Low See Ching (Liu Shijin) (2) 222,571, ,503,592, Ng Weng Sui Harry 198, Phua Sian Chin Substantial Shareholders (other than Directors) Bullish Investment Pte. Ltd. 1,503,592, Tee Wee Sien (Zheng Weixian) 369,728, % (1) 4. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS The interests of the Directors and Substantial Shareholders in the issued share capital of the Company as at the Latest Practicable Date, as recorded in the Register of Director s Shareholdings and the Register of Substantial Shareholders kept by the Company, were as follows:- Notes:- (1) The percentage of issued share capital of the Company is calculated based on 2,948,219,971 Shares (excluding treasury shares) as at the Latest Practicable Date. (2) Each of Ching Chiat Kwong and Low See Ching (Liu Shijin) is deemed to have an interest in the 1,503,592,200 Shares held by Bullish Investment Pte. Ltd. by virtue of Section 7 of the Companies Act. None of the Directors or Substantial Shareholders of the Company has any interest, direct or indirect, in the Proposed Acquisition and Proposed Development or the Proposed Expansion of Business Scope, other than through their respective shareholdings in the Company (if any). 5. DIRECTORS RECOMMENDATIONS 5.1 Proposed Acquisition and Proposed Development Having fully considered the rationale for the Proposed Acquisition and Proposed Development as set out in this Circular, the Directors believe that the Proposed Acquisition and Proposed Development are in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of the ordinary resolution to approve the Proposed Acquisition and Proposed Development to be tabled at the EGM. 5.2 Proposed Expansion of Business Scope Having fully considered the rationale for the Proposed Expansion of Business Scope as set out in this Circular, the Directors believe that the Proposed Expansion of Business Scope is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of the ordinary resolution to approve the Proposed Expansion of Business Scope to be tabled at the EGM. 14

15 6. EXTRAORDINARY GENERAL MEETING The EGM, notice of which is set out on pages 16 to 17 of this Circular, will be held at Raffles Lounge (Level 2), Raffles Country Club, 450 Jalan Ahmad Ibrahim, Singapore on Monday, 20 May 2013 at a.m. for the purpose of considering and, if thought fit, passing with or without modifications the ordinary resolutions set out in the notice of the EGM. 7. ACTION TO BE TAKEN BY SHAREHOLDERS Shareholders who are unable to attend the EGM and who wish to appoint a proxy or proxies to attend on their behalf are requested to complete, sign and return the Proxy Form attached to this Circular in accordance with the instructions printed thereon as soon as possible and, in any event, so as to reach the registered office of the Company not less than 48 hours before the time fixed for the EGM. The completion and lodgment of the Proxy Form by a Shareholder will not prevent him from attending and voting at the EGM in person if he so wishes. A Depositor shall not be regarded as a member of the Company entitled to attend the EGM and to speak and vote thereat unless his name appears on the Depository Register as at 48 hours before the EGM. 8. DIRECTORS RESPONSIBILITY STATEMENT The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confirm, after making all reasonable enquiries, that to the best of their knowledge and belief, this Circular constitutes full and true disclosure of all material facts about the Proposed Acquisition and Proposed Development, the Proposed Expansion of Business Scope, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Circular misleading. Where information in this Circular has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Circular in its proper form and context. 9. DOCUMENTS AVAILABLE FOR INSPECTION The following documents are available for inspection at the registered office of the Company at 50 Raffles Place #11-02 Singapore Land Tower, Singapore during normal business hours from the date of this Circular up to the date of the EGM:- (a) (b) (c) (d) the Option; the valuation report prepared by the Valuers; the annual report of the Company for the financial year ended 30 June 2012; and the memorandum and articles of association of the Company. Yours faithfully For and on behalf of the Board of Directors of OXLEY HOLDINGS LIMITED Ching Chiat Kwong Executive Chairman and Chief Executive Officer 15

16 NOTICE OF EXTRAORDINARY GENERAL MEETING OXLEY HOLDINGS LIMITED (Incorporated in the Republic of Singapore) (Company Registration No G) NOTICE OF EXTRAORDINARY GENERAL MEETING ORDINARY RESOLUTION 1 NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Oxley Holdings Limited (the Company ) will be held at Raffles Lounge (Level 2), Raffles Country Club, 450 Jalan Ahmad Ibrahim, Singapore on Monday, 20 May 2013 at a.m. for the purpose of considering and, if thought fit, passing with or without modifications, the following ordinary resolutions:- PROPOSED ACQUISITION OF THE PROPERTY KNOWN AS 30 STEVENS ROAD, SINGAPORE AND PROPOSED DEVELOPMENT THEREOF That:- (a) (b) (c) (d) (e) (f) the entry into and exercise of the conditional option dated 15 March 2013 (the Option ) granted by Exklusiv Resorts Pte Ltd (the Vendor ) to Oxley Gem Pte. Ltd. (the Purchaser ) to purchase the leasehold estate for a term of 103 years in the property known as 30 Stevens Road, Singapore (being the whole of Lots 404L, 406M and 99893X, all of TS 26) (the Property ) and to undertake the transactions contemplated therein, be and is hereby approved and authorised; approval be and is hereby given for the acquisition of the leasehold estate for a term of 103 years in the Property by the Purchaser, being the Company s wholly-owned subsidiary, at the purchase price of S$318,000,000 pursuant to the terms and conditions of the Option; approval be and is hereby given for the Purchaser to undertake the proposed development on the Property of hotels, commercial buildings and a clubhouse with basement, or such other development as may be approved by the relevant authorities; approval be and is hereby given for the Purchaser to issue (the Bond Issue ) S$100,000, guaranteed 6% bonds due 2015 (the Bonds ) on the terms and conditions contained in the Subscription Agreement (which is attached to the Option as Appendix 3) (the Subscription Agreement ) to be entered into between the Purchaser (as issuer), the Company (as guarantor) and the Vendor (as subscriber); approval be and is hereby given for the Company to enter into the Subscription Agreement, the bond certificates in favour of the Bondholders (as defined in the Subscription Agreement) (the Bond Certificates ) together with such other agreements and documents under or in connection with or to be given pursuant to the Bond Issue, the Bonds, the Subscription Agreement and/or the Bond Certificates; and the directors of the Company and each of them be and are hereby authorised and empowered to exercise such discretion to complete and do all such acts and things, including without limitation, to sign, seal, execute and deliver all such documents and deeds, and to approve any amendment, alteration or modification to any document, as they or he may consider necessary, desirable or expedient or in the interest of the Company to give effect to this resolution. 16

17 NOTICE OF EXTRAORDINARY GENERAL MEETING ORDINARY RESOLUTION 2 (a) (b) approval be and is hereby given for the Company and its subsidiaries to expand the scope of their business to include the business comprising development of and investments in hotels for sale or lease or for which the management and operation thereof shall be outsourced, including ownership of hotels, holding of investments in hotels and trading in hotels; and the directors of the Company and each of them be and are hereby authorised and empowered to exercise such discretion to complete and do all such acts and things, including without limitation, to sign, seal, execute and deliver all such documents and deeds, and to approve any amendment, alteration or modification to any document, as they or he may consider necessary, desirable or expedient or in the interest of the Company to give effect to this resolution. By Order of the Board Ng Kok Peng Company Secretary Singapore, 3 May 2013 PROPOSED EXPANSION OF THE BUSINESS SCOPE OF THE GROUP TO INCLUDE THE HOTEL DEVELOPMENT BUSINESS That:- Notes:- (1) A member of the Company entitled to attend and vote at the Extraordinary General Meeting may appoint not more than two proxies to attend and vote in his stead. (2) Where a member appoints two proxies, he shall specify the proportion of his shareholding to be represented by each proxy in the Proxy Form. A proxy need not be a member of the Company. (3) If the member is a corporation, the Proxy Form must be executed under seal or the hand of an officer or attorney duly authorised. (4) The Proxy Form must be deposited at the registered office of the Company at 50 Raffles Place #11-02 Singapore Land Tower, Singapore , not less than 48 hours before the time appointed for the Extraordinary General Meeting. 17

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19 PROXY FORM OXLEY HOLDINGS LIMITED (Incorporated in the Republic of Singapore) (Company Registration No G) PROXY FORM IMPORTANT 1. For investors who have used their CPF moneys to buy shares in the capital of Oxley Holdings Limited, this Circular is forwarded to them at the request of their CPF Approved Nominees and is sent FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by such CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. I/We of (Name) (Address) being a *member/members of OXLEY HOLDINGS LIMITED (the Company ) hereby appoint: Name Address NRIC / Passport Number Proportion of Shareholdings (%) and/or (delete as appropriate) Name Address NRIC / Passport Number Proportion of Shareholdings (%) or failing him/her, the Chairman of the Meeting, as *my/our *proxy/proxies to attend and to vote for *me/ us on *my/our behalf, at the Extraordinary General Meeting of the Company to be held at Raffles Lounge (Level 2), Raffles Country Club, 450 Jalan Ahmad Ibrahim, Singapore on Monday, 20 May 2013 at a.m. and at any adjournment thereof. *I/We direct *my/our *proxy/proxies to vote for or against the resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, the *proxy/proxies will vote or abstain from voting at *his/her/their discretion, as *he/she/they will on any other matter arising at the Meeting and at any adjournment thereof. No. Ordinary Resolutions For Against 1. To approve the Proposed Acquisition and Proposed Development 2. To approve the Proposed Expansion of Business Scope (Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolution as set out in the Notice of the Meeting.) Signed this day of 2013 Total number of Shares in: (a) CDP Register No. of Shares (b) Register of Members Signature(s) of Member(s) or Common Seal IMPORTANT: PLEASE READ NOTES OVERLEAF