Terminated hotel deal a setback for Oxley's deleveraging plans
https://www.businesstimes.com.sg/co...-deal-a-setback-for-oxleys-deleveraging-plans
AGGRESSIVELY geared Oxley Holdings will find it harder to keep to its stated deleveraging schedule after a planned S$950 million sale of two Stevens Road hotels fell though.
BT understands that Gracious Land is owned by Indonesian tycoon Tahir, who goes by one name, and is the founder of Mayapada Group. Mayapada is a conglomerate with interests in banking, a hospital chain and real estate. Oxley said that among other things, Gracious Land had failed to meet a Feb 28 deadline to pay a deposit of S$38 million, being 4 per cent of the total consideration.
Oxley said it therefore notified Gracious Land of the termination of the LOI.
The buyer has also requested a refund of an initial S$9.5 million deposit it had paid to Oxley. The Singapore property group, however, has said it does not have to repay that amount, setting up both sides for a possible dispute.
Why Gracious Land did not keep to the payment schedule is anyone's guess. The collapsed deal is a setback for Oxley's plans to strengthen its balance sheet.
The company said in February that its gearing will improve from 2.55 times as at end-December 2018 to about two times upon the completion of sale of the two hotels. Most developers try to keep to a gearing limit of one at most.
Oxley was hoping to bring its debt level down to equal its equity value by the end of the year, executive chairman and chief executive Ching Chiat Kwong told BT in an interview published earlier this month.
The company has said it plans to pay off S$1.6 billion of debt due in the next three years through the sale of completed projects and through asset disposals.
The most pressing debt issue for Oxley at the moment comes from its S$450 million of retail bonds maturing in November 2019 and May 2020, she said.
DBS Group Research analyst Rachel Tan cautioned against being too optimistic about deals that have not been sealed. The LOI for the two hotels and the EOI for Chevron House are all non-binding, and there was no certainty from the start that the sales would be completed, she said.
Having said that, "the company has said it is ensuring that it can pay off the retail bonds that are expiring, and also has some cash coming back from its overseas projects in the United Kingdom and Dublin," Ms Tan added.
At the very least, the company appears to be trying to relieve the pressure on its balance sheet.
"Their gearing is high, so there is always this risk, but they are doing something about it, evident from their efforts to get buyers to acquire their assets to ensure that they can pay back their debt," Ms Tan said.
https://www.businesstimes.com.sg/co...-deal-a-setback-for-oxleys-deleveraging-plans
AGGRESSIVELY geared Oxley Holdings will find it harder to keep to its stated deleveraging schedule after a planned S$950 million sale of two Stevens Road hotels fell though.
BT understands that Gracious Land is owned by Indonesian tycoon Tahir, who goes by one name, and is the founder of Mayapada Group. Mayapada is a conglomerate with interests in banking, a hospital chain and real estate. Oxley said that among other things, Gracious Land had failed to meet a Feb 28 deadline to pay a deposit of S$38 million, being 4 per cent of the total consideration.
Oxley said it therefore notified Gracious Land of the termination of the LOI.
The buyer has also requested a refund of an initial S$9.5 million deposit it had paid to Oxley. The Singapore property group, however, has said it does not have to repay that amount, setting up both sides for a possible dispute.
Why Gracious Land did not keep to the payment schedule is anyone's guess. The collapsed deal is a setback for Oxley's plans to strengthen its balance sheet.
The company said in February that its gearing will improve from 2.55 times as at end-December 2018 to about two times upon the completion of sale of the two hotels. Most developers try to keep to a gearing limit of one at most.
Oxley was hoping to bring its debt level down to equal its equity value by the end of the year, executive chairman and chief executive Ching Chiat Kwong told BT in an interview published earlier this month.
The company has said it plans to pay off S$1.6 billion of debt due in the next three years through the sale of completed projects and through asset disposals.
The most pressing debt issue for Oxley at the moment comes from its S$450 million of retail bonds maturing in November 2019 and May 2020, she said.
DBS Group Research analyst Rachel Tan cautioned against being too optimistic about deals that have not been sealed. The LOI for the two hotels and the EOI for Chevron House are all non-binding, and there was no certainty from the start that the sales would be completed, she said.
Having said that, "the company has said it is ensuring that it can pay off the retail bonds that are expiring, and also has some cash coming back from its overseas projects in the United Kingdom and Dublin," Ms Tan added.
At the very least, the company appears to be trying to relieve the pressure on its balance sheet.
"Their gearing is high, so there is always this risk, but they are doing something about it, evident from their efforts to get buyers to acquire their assets to ensure that they can pay back their debt," Ms Tan said.
