THE PROPOSED TRANSACTION IN RELATION TO 100.0% OF THE ISSUED AND PAID-UP SHARE CAPITAL OF EACH OF (1) OUELH JAPAN MEDICAL FACILITIES PTE. LTD., WHICH OWNS A 100.0% INTEREST IN 12 NURSING HOMES LOCATED IN JAPAN; AND (2) OUELH JAPAN MEDICAL ASSETS PTE. LTD.

1. INTRODUCTION

1.1. The Board of Directors (the "Board" or "Directors") of OUE Lippo Healthcare Limited (the "Company" and together with its subsidiaries, the "Group") wishes to announce that the Company has on 7 December 2021 entered into:

  1. a sale and purchase agreement (the "JMF SPA") with Perpetual (Asia) Limited (in its capacity as trustee of First Real Estate Investment Trust ("First REIT")) (the "Purchaser") for the divestment of 100.0% of the issued and paid-up share capital (the "JMF Sale Shares") of OUELH Japan Medical Facilities Pte. Ltd. ("JMF"), a wholly- owned subsidiary of the Group which owns a 100.0% interest in the Japan Nursing Homes (as defined below), to the Purchaser, for a purchase consideration of approximately S$163.2 million ("JMF Consideration"), subject to certain post- completion adjustments based on the net assets of the JMF Group (as defined below) as at the Completion Date (as defined below); and
  2. a sale and purchase agreement (the "JMA SPA") with the Purchaser for the divestment of 100.0% of the issued and paid-up share capital (the "JMA Sale Shares" and together with the JMF Sale Shares, the "Target Shares") of OUELH Japan Medical Assets Pte. Ltd. ("JMA"), a wholly-owned subsidiary of the Group, to the Purchaser, for a purchase consideration of approximately S$0.3 million ("JMA Consideration"), subject to certain post-completion adjustments based on the net assets of the JMA Group (as defined below) as at the Completion Date,

(collectively, the "Proposed Transaction").

  1. The divestment of the JMF Sale Shares and the JMA Sale Shares by the Company to the Purchaser under the JMF SPA and JMA SPA, respectively, shall be completed simultaneously. Please refer to Paragraph 6 of this Announcement for further details.
  2. The Proposed Transaction is considered a "major transaction" of the Company as defined under Chapter 10 of the Listing Manual Section B: Rules of Catalist (the "Catalist Rules") of the Singapore Exchange Securities Trading Limited (the "SGX-ST"). Accordingly, the Proposed Transaction will be subject to, amongst others, the approval of the shareholders of the Company (the "Shareholders") at an extraordinary general meeting of the Company (the "EGM") to be convened in due course.

OUE Lippo Healthcare Limited

Company Registration No. 201304341E

6 Shenton Way, #10-09A, OUE Downtown 2, Singapore 068809

  1. +65 6578 9188 F: 64794647 Web: www.ouelh.com

1.4. For further information on the Proposed Transaction, please refer to the announcement dated 8 December 2021 released by First REIT Management Limited (the "First REIT Manager"), in its capacity as the manager of First REIT, in relation to, inter alia, the proposed acquisition by the Purchaser of the JMF Sale Shares and the JMA Sale Shares, a copy of which is available on the website of the SGX-ST at www.sgx.com.

  1. INFORMATION RELATING TO FIRST REIT
    First REIT is a real estate investment trust listed on the Main Board of the SGX-ST. The First REIT Manager is responsible for the day-to-day management of First REIT. Listed on the SGX-
    ST on 11 December 2006, First REIT's investment policy is to invest in a diversified portfolio of income-producing real estate and/or real estate-related assets in Asia that are primarily used for healthcare and/or healthcare-related purposes1.
    As at 30 June 2021, First REIT's existing portfolio comprised 202 properties, 16 of which were located in Indonesia, three in Singapore and one in South Korea2. The value of First REIT and its subsidiaries' total assets as at 30 June 2021 was S$1,016.5 million. As at 15 October 2021, the market capitalisation of First REIT was S$426.5 million3.
    As at 26 October 2021, OUE Limited ("OUE"), a controlling shareholder of the Company, has a deemed interest in approximately 28.81%4 of the units in First REIT ("Units"), held through OLH Healthcare Investments Pte. Ltd., a wholly-owned subsidiary of the Company (approximately 15.30%), the First REIT Manager (approximately 10.19%) and Clifford Development Pte. Ltd., a wholly-owned subsidiary of OUE (approximately 3.32%).
  2. INFORMATION RELATING TO THE TARGET GROUP (AS DEFINED BELOW) AND THE TARGET SHARES

3.1. Information relating to the JMF Group (as defined below)

JMF is a private company limited by shares incorporated in Singapore on 3 January 2013 and is an investment holding company. As at the date of this Announcement, the Company holds 45,734,139 shares in JMF, representing 100.0% of the issued and paid-up share capital of JMF.

JMF indirectly owns 12 nursing homes located across Japan in Hokkaido, Nagano, Nara and Kyoto (the "Japan Nursing Homes") which are leased to independent nursing home operators via OUELH Japan First Tokutei Mokuteki Kaisha ("OUELH TMK (Japan)"). OUELH TMK (Japan) holds the Japan Nursing Homes, as well as acts as lessor to the master lease agreements entered into with the various local Japanese operators of the Japan Nursing Homes

that provide daily services, medical consultation services, leisure and entertainment

1Including, but not limited to, hospitals, nursing homes, medical clinics, pharmacies, laboratories, diagnostic/imaging facilities and real estate and/or real estate related assets used in connection with healthcare research, education, lifestyle and wellness management, manufacture, distribution or storage of pharmaceuticals, drugs, medicine and other healthcare goods and devices and such other ancillary activities relating to the primary objective, whether wholly or partially owned, and whether directly or indirectly held through the ownership of special purpose vehicles whose primary purpose is to hold or own real estate.

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As announced by the First REIT Manager on 19 July 2021, First REIT's wholly-owned subsidiaries had entered into conditional sale and purchase agreements in relation to the sale by First REIT's indirect wholly-owned subsidiary, Kalmore (Korea) Limited ("Kalmore Korea"), of the property known as "Sarang Hospital" and the sale by First REIT's direct wholly-owned subsidiary, Kalmore Investments Pte. Ltd., of all of the shares of Kalmore Korea (the "Divestment"). As announced by the First REIT Manager on 31 August 2021, the Divestment had been completed on 31 August 2021.

Based on a total number of Units of 1,609,277,956 Units and a closing price of S$0.265 per Unit.

Unless otherwise stated, all percentage unitholdings in this Announcement are based on 1,613,028,634 Units in issue as at the date of this Announcement and any discrepancies in the percentage unitholdings are due to rounding.

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programmes as well as nursing care, including special meal preparation, provision of functional training and toilet and bathing assistance.

Tokutei Mokuteki Kaisha ("TMK") refers to a special purpose company established under the Act on Securitization of Assets of Japan ("Securitization Law"), which is entitled to reduced tax rates (upon the acquisition of a real estate) provided certain criteria are met. A TMK can also constitute a tax pass-through entity (although only with respect to profits) if certain criteria are satisfied.

In order to be a tax-qualifying TMK, the shareholding structure of OUELH TMK (Japan) is as follows:

  1. 75.0% of the specified equities5 in OUELH TMK (Japan) are held by OUELH Japan One ippan shadan hojin ("OUELH ISH (Japan)"), which is a bankruptcy remote entity6 established solely to act as a holder of the specified equities of OUELH TMK (Japan). OUELH ISH (Japan) has no potential income, loss or net worth. As at the date of this Announcement, JMF and Mr. Hiroko Takizawa, JMF's representative director on the board of OUELH ISH (Japan), are the members of OUELH ISH (Japan);
  2. 51.0% of the preferred equities7 in OUELH TMK (Japan) are held by OUELH Japan 1 godo kaisha ("OUELH GK (Japan)"), which is a limited liability company established under the Company Act of Japan. As at the date of this Announcement, JMF holds 100.0% of the issued and paid-up capital of OUELH GK (Japan); and
  3. the remaining 25.0% of the specified equities and 49.0% of the preferred equities of OUELH TMK (Japan) are held by JMF.

3.2. Information relating to JMA

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JMA is a private company limited by shares incorporated in Singapore on 2 October 2014 and is an investment holding company. As at the date of this Announcement, the Company holds one (1) ordinary share in JMA, representing 100.0% of the issued and paid-up share capital of JMA.

JMA in turn holds 100.0% of the total issued and paid-up capital in OUELH Japan Management Co., Ltd. ("HJKK"), a kabushiki kaisha company incorporated in Japan, which is a joint stock company established to act as the current asset manager in respect of the Japan Nursing Homes.

The equivalent of ordinary shares. The holders of specified equities are subordinated to the holders of the preferred equities in the distributions of the dividends from and, at the time of winding-up, the residual assets of, the TMK. Usually, no dividend is distributed to the specified equity holders. Under the Securitization Law, the holders of the specified equities are entitled to vote at the general meetings of the equity holders. The transfer of a specified equity is subject to the approval of the TMK.

This refers to an entity formed to own a specific asset (which, in the case of OUELH ISH (Japan), would be the specified equities) while isolating financial risk and minimising bankruptcy risk. It is typically prohibited from incurring debt and is limited in its purpose and the activities in which it may engage (which, in the case of OUELH ISH (Japan), is to own the specified equities). Often, a person who is independent from an owner of the entity will take a seat of the governance of the entity so that the entity may not be affected by the bankruptcy risk of the owner.

The equivalent of preference shares, designed for investment by investors. The holders of preferred equities have priority over the holders of the specified equities in the distributions of the dividends from and, at the time of winding- up, the residual assets of, the TMK. Under the Securitization Law, except otherwise provided by law or the articles of incorporation of the TMK, the holders of the preferred equities are not entitled to vote at the general meeting of the equity holders. The restriction on the transfer of the preferred equity is prohibited.

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3.3. Information relating to the Target Group (as defined below)

Based on the latest full year audited consolidated financial statements of the Group for the financial year ended 31 December 2020 ("FY2020"), JMF, JMA and their subsidiaries (collectively, the "Target Group") recorded a book value and net tangible asset value of S$159.4 million, a revenue of approximately S$17.5 million and a net profit of approximately S$11.2 million.

Based on the unaudited consolidated financial statements of the Group for the six-month period ended 30 June 2021 ("1H2021"):

  1. the book value and the net tangible asset ("NTA") value attributable to the Target Group are approximately S$157.7 million; and
  2. the net profits attributable to the Target Group is approximately S$6.2 million.

The Proposed Transaction will not result in a net gain or net loss for the Group upon completion.

3.4. Independent Valuation of the Japan Nursing Homes

For the purposes of the Proposed Transaction, the Company has commissioned Colliers International Japan KK Valuation & Advisory Services (the "Independent Valuer"), as a competent and independent valuer, to perform a valuation on the Japan Nursing Homes. The Independent Valuer is licensed as a real estate appraiser under the Tokyo Metropolitan Government Office to perform property valuations in Japan, and has more than five (5) years of experience in valuing real properties in a similar industry and area as the Japan Nursing Homes.

Based on the valuation reports issued by the Independent Valuer on 3 December 2021 (the "Valuation Report"), the market value of the Japan Nursing Homes as at 12 November 2021 is approximately JPY24.2 billion (approximately S$302.7 million8). The valuation of the Japan Nursing Homes was arrived at based on the income approach (discounted cash flow ("DCF") method and direct capitalisation method), with reference made to the cost approach. In respect of the income approach, the DCF method was the preferred approach as it is considered to be a more convincing method due to, among others, using specific net operating income for each period and reversionary value in arriving at the income approach value. The valuation was conducted in accordance with the Japan's Real Estate Appraisal Standard.

4. PRINCIPAL TERMS OF THE JMF SPA

A summary of the material terms and conditions of the JMF SPA is as follows.

  1. JMF Sale Shares
    The Company shall sell, and the Purchaser shall purchase, the JMF Sale Shares free and clear of any encumbrance and together with all rights, benefits and advantages attaching thereto from the Completion Date.
  2. JMF Consideration
    The JMF Consideration, subject to post-completion adjustments, shall be satisfied by the Purchaser on completion under the JMF SPA (the "JMF SPA Completion") in the following manner:

8Computed based on the exchange rate of S$1.00:JPY80.00.

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  1. approximately S$9.4 million and any net JMF Accrued Amounts (as defined below) will be net-off against the Company's obligation to pay the amount of the JMF Intercompany Balances (as defined below);
  2. approximately S$6.8 million and any net JMA Accrued Amounts (as defined below) will be net-off against the Company's obligation to pay the amount of the JMA Intercompany Balances (as defined below);
  3. approximately S$15.5 million shall be satisfied in cash; and
  4. approximately S$131.5 million shall be satisfied by way of the allotment and issuance of 431,147,541 new Units ("Consideration Units") at the issue price of S$0.305 per Consideration Unit to the Company and/or its nominee(s). In connection therewith, the Company intends to nominate OLH Healthcare Investments Pte. Ltd., a wholly-owned subsidiary of the Company, to receive the Consideration Units.
    As the Consideration Units will not be entitled to participate in the distributable income of First REIT for the period immediately prior to the date the Consideration Units are issued and will only be entitled to participate in the distributable income of First REIT from the date of their issue, it is necessary for the Consideration Units to trade under a separate stock counter for the period commencing from their date of issue to the last day of "cum-distribution" trading, in respect of the distribution period in which the Consideration Units are issued. After the last day of "cum-distribution" trading, the Consideration Units trading on the temporary stock counter as well as the existing Units will be aggregated and traded under the same stock counter on the next market day, i.e. the first day of "ex-distribution" trading for both the Consideration Units and the existing Units.
    The Consideration Units, when issued and delivered in accordance with the terms of the JMF SPA, shall rank pari passu in all respects with all Units in issue as at the date prior to the date of issue of the Consideration Units, including the right to receive any distributions declared, made or paid, save for the entitlement to any distribution to Unitholders (as defined below) for the period up to the day immediately preceding the date of issue of the Consideration Units. The Consideration Units will be entitled to receive distributions by First REIT from the date of their issue to the end of the distribution period in which the Consideration Units are issued, as well as all distributions thereafter.

The JMF Consideration of approximately S$163.2 million and the issue price of S$0.305 per Consideration Unit was arrived at after negotiations on an arm's length basis and on a willing- buyer and willing-seller basis, after taking into account, inter alia, (a) the estimated net asset value of JMF and its subsidiaries (collectively, the "JMF Group") as set out in the consolidated accounts of the JMF Group as at 30 September 2021, which includes the valuation of the Japan Nursing Homes based on the Valuation Reports; (b) that the issue price of S$0.305 per Consideration Unit represents a discount of 13.1% to the net asset value per Unit of S$0.351 of First REIT as at 30 June 2021; and (c) that the issue price of S$0.305 per Consideration Unit represents a slight premium of 3.4% to the volume weighted average price of S$0.295 of the Units for the full market day on 6 December 2021, being the full market day prior to which the JMF SPA was signed.

The JMF Consideration represents an excess of approximately S$4.1 million and S$5.8 million over the book value of the JMF Group as at 31 December 2020 and 30 June 2021 respectively.

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Oue Lippo Healthcare Ltd. published this content on 08 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 December 2021 01:11:10 UTC.