PROPOSED DIVESTMENT OF APOLLO CENTRE INTRODUCTION The Board of

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PROPOSED DIVESTMENT OF APOLLO CENTRE INTRODUCTION The Board of Powered By Docstoc
					Company Registration No. 196700502G



PROPOSED DIVESTMENT OF APOLLO CENTRE


INTRODUCTION

The Board of Directors (Board) of Apollo Enterprises Ltd (Company) refers to its announcements dated
11 and 13 December 2007 in relation to the grant of an option (Option) by Apollo Center Pte Ltd
(Seller), a wholly owned subsidiary of the Company, to AEW VIA SP3 Pte Ltd (Purchaser) to dispose
(Proposed Disposal) of Apollo Centre (Building).

The Board is pleased to announce that the Purchaser has today exercised the Option and entered into a
Sale and Purchase Agreement (Agreement) with the Seller to purchase all the registered estate and
interest in the whole of Lot 278L of Town Subdivision 8 together with the Building erected thereon
(Property) at a purchase price of $205 million (Purchase Price) exclusive of goods and services tax
thereon.

THE PROPERTY

The Property has a leasehold tenure with an unexpired portion of a term of 99 years commencing from 4
May 1983, and has a site area of 5,068.8 square metres. The Building is a seven-storey office and
shopping complex with 95 car park lots spread over two basement levels. As at the date of this
announcement, the Property is approximately 92% occupied. The Property is designated for commercial
and retail use with an allowable plot ratio of 3.98 and a maximum height limit of seven storeys. Based on
the audited consolidated financial statements of the Company and its subsidiaries (Group) as at 31
December 2006, the gross rental and service fee income attributable to the Property for the financial year
ended 31 December 2006 was approximately S$5,644,000.

PURCHASE PRICE

The Purchase Price was arrived at after arms’ length negotiations on a willing-buyer willing-seller basis.
Payment of the Purchase Price is as follows:

(a)     upon signing of the Agreement, a payment equivalent to 10% of the Purchase Price less the
        option fee of 1% of the Purchase Price (Exercise of Option Monies) was paid by the Purchaser to
        the Seller's solicitors by way of cashier's order(s) and the Exercise of Option Monies shall be
        held by the Seller's solicitors as stakeholders in accordance with the terms of the Agreement.
        The 1% option fee, which was paid by the Purchaser upon the grant of the Option on 11
        December 2007 to the Seller's solicitors as stakeholders, shall continue to be held by the Seller's
        solicitors as stakeholders in accordance with the terms of the Agreement and shall together with
        the Exercise of Option Monies be deemed to be payment of the deposit under the Agreement;
        and

(b)     a further 90% of the Purchase Price together with goods and services tax on the entire Purchase
        Price (unless otherwise exempted) shall be paid by the Purchaser to the Seller on the date of
        completion for the sale and purchase of the Property (Completion), such payment to be by way
        of cashier's order(s) made in favour of the Seller or any third party as directed by the Seller or the
        Seller's solicitors.




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NET BOOK VALUE

Based on the audited consolidated financial statements of the Group as at 31 December 2006, the net
book value of the Property (including the plant and equipment at the Property) was S$68,220,000.

RATIONALE FOR THE PROPOSED DISPOSAL

The Board believes that this is an opportune time for the Group to realise its investment in the Property,
having regard to the current buoyant market conditions in the Singapore commercial real estate market.
The Proposed Disposal will improve the Group’s financial position by reducing its liabilities, and is also
expected to enhance the Group’s operational performance by improving its cash flow position and
providing funds for future expansion.

CONDITIONS PRECEDENT

Due Diligence Conditions

The Property is sold subject to the fulfillment of the following due diligence conditions (DD Conditions):

(a)     the report in relation to the Property issued by the building consultants engaged by the Purchaser
        in connection with the Purchaser’s due diligence investigations of the Property not containing:

        (i)     a recommendation by the building consultants that works are required to be carried out in
                order to ensure the structural integrity or stability of the Building as required by Section
                28 of the Building Control Act;

        (ii)    a finding by the building consultants that works are required to be carried out in respect
                of the lifts, escalators, car park equipment, chilled water/condenser water pumps, fire-
                fighting system and/or air-conditioning system serving the Building in order to ensure
                that the foregoing will remain in working order during the 12 months following the date
                of the report;

        (iii)   a finding by the building consultants that there are structures or installations at the
                Building which had been erected or installed without the approval of the competent
                authority (where required by law); or

        (iv)    a finding by the building consultants of the presence of asbestos in the Building.

(b)     the report in relation to the Property issued by the registered surveyors engaged by the Purchaser
        disclosing that there is no encroachment affecting the Property; and

(c)     there being a provision contained in each of the existing or new occupation agreements which
        permits the Seller (as landlord or licensor) to terminate each such occupation agreement by the
        giving of not more than six months' prior written notice including (where applicable) by the
        giving of such notice after a moratorium period or specified date.

If the DD Conditions are not fulfilled, the Purchaser shall issue a written notice thereof (DD
Notification) to the Seller within five business days after the date of the Agreement, failing which, the
DD Conditions shall be deemed to have been fulfilled and the Purchaser shall not be entitled to issue the
DD Notification.

Where the DD Notification is duly issued by the Purchaser and such DD Notification relates to any of the
DD Conditions referred to in (a) and (b) above, the Seller shall be entitled to give written notice (Vendor
Notification) to the Purchaser electing either to carry out rectification or regularisation works (as the case
may be), or pay over to the Purchaser on the date of Completion an amount equivalent to the sum
specified in a quotation procured by the Purchaser from a reputable contractor setting out in reasonable
detail the estimated costs (DD Works Costs) for the rectification or regularisation works. In the event the
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Vendor Notification is not issued by the date falling three weeks after the Seller's receipt of such DD
Notification, the Purchaser may by notice in writing elect to deduct an amount equivalent to the DD
Works Costs on Completion, or rescind the Agreement, in which event, within seven days from (and
including) the date of such notice of rescission, the Seller’s solicitors shall refund to the Purchaser the
10% deposit (together with accrued interest).

Shareholders’ Approval

The Property is sold subject to and conditional upon the approval of the Company's shareholders
(Shareholders) being obtained for the Proposed Disposal and not having been withdrawn or amended on
or before the date of Completion. In the event that such Shareholders’ approval is not obtained by the
“Long Stop Date” (which is defined in the Agreement to mean 10 April 2008) or such other date as may
be agreed in writing between the Seller and the Purchaser, either the Seller or the Purchaser may rescind
the Agreement and within seven days thereafter, the Seller’s solicitors must refund the 10% deposit to the
Purchaser (together with accrued interest).

The Seller has agreed to furnish the Purchaser with an undertaking from Samta Investment Pte Ltd, the
holding company of the Company, which provides that, subject to the exceptions to be set out in the
undertaking, it will, in respect of 78,245,628 shares in the capital of the Company (representing 50.7%
of the issued shares in the capital of the Company as at the date of this announcement), vote in favour of
the ordinary resolution relating to the Proposed Disposal at the extraordinary general meeting to be
convened by the Company.

COMPLETION

Completion of the sale and purchase of the Property is contractually scheduled to take place on the date
falling 15 weeks after the date of the Agreement, or the date falling four weeks after the date on which
the Seller had given written notice to the Purchaser of the grant of the Shareholders' approval for the
Proposed Disposal, whichever is later.

USE OF NET PROCEEDS

If the Proposed Disposal proceeds to Completion, the Company estimates the net proceeds from the
Proposed Disposal, after deducting all expenses and tax, to be approximately $204,335,000. The excess
of the net proceeds over the carrying amount of the Property is approximately S$138,389,000.

The Directors may, if they consider it appropriate, distribute part of the net proceeds from the Proposed
Disposal to Shareholders by way of dividends or such other mode as the Directors may deem fit.
Alternatively, the Directors may consider deploying the net proceeds from the Proposed Disposal for
investments relating to the Group’s core businesses and to fund operating expenses and future expansion.

Pending deployment, the Net Proceeds from the Proposed Disposal may be placed in fixed deposits,
invested in money market instruments, used to reduce bank borrowings or used for such other purposes
as the Directors may deem fit.

FINANCIAL EFFECTS

Earnings per share (EPS)

For illustration purposes only, the financial effects of the Proposed Disposal on the net tangible assets per
share and earnings per share, based on the audited consolidated financial statements of the Group for the
financial year ended 31 December 2006, are set out below:




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Net Tangible Assets (NTA)

Assuming that the Proposed Disposal had been completed on 31 December 2006, and based on the
Group’s audited consolidated financial statements for the financial year ended 31 December 2006, the
effect on the NTA per share as at 31 December 2006 would be as follows:

                                                                               Before                                After
                                                                          Proposed Disposal                     Proposed Disposal
    NTA (S$)                                                                      188,195,160                           324,310,298
    No. of Shares                                                                 154,301,300                           154,301,300
    NTA per Share (S$)                                                                   1.22                                   2.10

Earnings per share (EPS)

Assuming that the Proposed Disposal had been completed on 1 January 2006, , and based on the Group’s
audited consolidated financial statements for the financial year ended 31 December 2006, the effect on
the EPS for the financial year ended 31 December 2006 would be as follows:

                                                                               Before                                After
                                                                          Proposed Disposal                     Proposed Disposal
    Profit attributable to Shareholders (S$)                                       39,101,835                           175,216,973
    No. of Shares                                                                 154,301,300                           154,301,300
    EPS (cents)                                                                         25.34                                113.56

Note: The financial effect on the EPS takes into account the gross annual rental less property tax,
maintenance contribution, depreciation and interest expense. It is assumed that no income tax is payable
on the sale of the Property as it was purchased and developed as a long-term investment.

RELATIVE FIGURES UNDER RULE 1006 OF THE LISTING MANUAL

The relative figures for the Proposed Disposal computed on the bases set out in Rule 1006 of the Listing
Manual of the Singapore Exchange Securities Trading Limited (Listing Manual) are as follows:

    (a)       Net asset value of the Property of S$65,946,000 compared with the Group’s net                                           34.9%
              asset value of S$188,692,000 based on the latest announced consolidated
              accounts1

    (b)       Net loss attributable to the Property of S$898,000 compared with the Group’s net                                         -5.0%
              profits of S$18,108,000 based on the latest announced consolidated accounts1

    (c)       Consideration received compared with the Group’s market capitalisation of                                               51.7%
              $396,554,341 as at 26 December 20072, based on the total number of issued shares
              excluding treasury shares

    (d)       Number of equity securities issued by the Company as consideration for an                                            Not
              acquisition, compared with the number of equity securities previously in issue                                    applicable


As the relative figures for bases (a) and (c) exceed twenty per cent (20%), the Proposed Disposal would
constitute a major transaction for the purposes of, and would be subject to, the provisions of Rules 1013
and 1014 of the Listing Manual. Accordingly, Shareholders’ approval must be obtained for the Proposed
Disposal.

1
 The latest announced consolidated accounts are the unaudited consolidated financial information of the Group for the financial period ended 30
September 2007.

2
    26 December 2007 is the market day preceding the date of the Agreement.
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An extraordinary general meeting of the Company will be convened to seek Shareholders’ approval for
the Proposed Disposal. A circular containing further details of the Proposed Disposal and enclosing the
notice of extraordinary general meeting will be despatched to Shareholders in due course.

DOCUMENT FOR INSPECTION

A copy of the Agreement is available for inspection at the registered office of the Company at 405
Havelock Road, Singapore 169633, during normal business hours for a period of three months from the
date of this announcement.

INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

None of the Directors, and to the best knowledge of the Directors, none of the controlling Shareholders
of the Company, has any interest, direct or indirect, in the Proposed Disposal. No directors are proposed
to be appointed on the Board in connection with the Proposed Disposal.

BY ORDER OF THE BOARD
Dorothy Ho
Company Secretary
Dated: 27 December 2007




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