Keppel Limited's wholly-owned subsidiary Keppel Hong Da (Tianjin Eco-City) Property Development Co has entered into an agreement to jointly develop 19 plots of land in Tianjin Eco-City Northern District, China.
The agreement, which is between Keppel Hong Da and Changzhou Fushi Real Estate Development, and Tianjin Shunhua Real Estate Construction Management, will also see the divestment of Keppel Hong Da's stake in the developer.
As a result, Tianjin Shunhua will pay Keppel Hong Da a consideration of CNY503.3 million, or $92.8 million for a 30% equity stake in Tianjin Fulong Property Development, the developer of the project.
Keppel says that the consideration will be paid in cash over two tranches.
Fulong, the developer of the project, will extend a loan to Tianjin Shunhua of CNY402.7 million with interest charged at prevailing five-year loan prime rate.
The completion of the divestment is expected to take place after various conditions have been satisfied, including the receipt of the consideration and the transfer of the relevant stake.
Following the divestment, Keppel Hong Da's stake in Fulong will be reduced from 51% to 21%, and the company Changzhou Fushi will continue to hold a 49% equity stake in Fulong.
Keppel Hong Da says that the partial divestment of Fulong is part of its asset monetisation programme and strategy to collaborate with an experienced real estate partner for the development of large scale projects.
Shares in Keppel closed 1.5 cents higher or 2.4% up at $6.40 on Apr 23.
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