20 January 2018
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Deadlock broken on Capitol Singapore project

Straits Times
04 Jan 2018
Grace Leong

Feuding parties' units to part ways, one will acquire the other's shares in associated firms

A deal has finally been struck after years of litigation over the iconic heritage property Capitol Singapore, deadlocked as relations soured between the shareholders - real estate veteran Pua Seck Guan and a member of the prominent Kwee family.

The Stamford Road project - described by a High Court judge as having "fallen into economic slumber" - is finally seeing light at the end of the tunnel.

A settlement was inked yesterday that is expected to result in units of Mr Pua's Perennial Real Estate and Chesham Properties, an affiliate of Mr Kwee Liong Seen's Pontiac Land, parting ways; and one of them owning the entire project.

The settlement provides for a mechanism by which either Chesham or the Perennial units will acquire all of the other's shares in three associated firms that hold the properties - Capitol Investment Holdings, Capitol Retail Management and Capitol Hotel Management.

The sale and purchase of shares is expected to be completed within 19 weeks of the date of the settlement agreement, according to a Singapore Exchange announcement released after market hours yesterday.

No shareholder approval is required for the settlement agreement. Further details on the purchase price were not disclosed.

A Perennial spokesman told The Straits Times yesterday: "We are pleased that we have arrived at a settlement with our partner, which will allow both parties to move forward with our respective plans with regard to Capitol Singapore. Further details can only be provided at the appropriate juncture."

The two were part of a consortium which put in the winning bid in 2010 for the restoration and development project. The aim was to return the heritage properties - Capitol Theatre, Capitol Building and Stamford House - to their former glory and add new vibrancy to the City Hall area with a luxury hotel, retail shops, residences and a theatre.

But by 2016, the project - valued by market observers at more than $1 billion - had stalled amid a bitter feud, with Perennial Real Estate launching winding-up applications on the three associated firms.

The High Court dismissed Perennial's application in March last year, ruling that it would not be just and equitable to wind up the companies, as there was an exit mechanism available to Perennial. Perennial appealed against the ruling but lost.

Observers say the settlement is a boon for the project, which had been deadlocked, as Mr Pua and Mr Kwee had not been on speaking terms for more than a year at the time of the winding-up applications.

The Patina, a six-star hotel whose 157 rooms are spread across the Capitol Building and Stamford House, got its temporary occupation permit in October 2015 but remains unopened to this day. The mall and Capitol Theatre opened earlier that year.

The High Court judgment revealed that Chesham, which is held by the Kwee family, blamed Mr Pua for the hotel not opening, as he allegedly refused to countersign payments for various expenses incurred by Patina.

Edmund Tie & Co head of research Lee Nai Jia believes the project has the ingredients to succeed. "The hotel plays an important part in ensuring the mall's success. Because the hotel remains unopened, the mall has had to have more mid-high end shops," Dr Lee noted.

Things improved when the closure of Funan shopping mall drove traffic to the food and beverage outlets at Capitol Piazza. "But how it repositions itself when Funan mall reopens is going to be critical," he said.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.