CapitaLand proposes restructuring to sharpen business focus and unlock shareholder value
Unless the context otherwise requires, all capitalised terms used but not defined herein shall have the respective meanings given to them in the joint announcement released by CapitaLand Limited and CLA Real Estate Holdings Pte. Ltd. on 22 March 2021 (the “Joint Announcement”).
1. What is the proposed transaction?
CapitaLand Limited (“CapitaLand”, together with its subsidiaries and associated companies, the “Group”), together with CLA Real Estate Holdings Pte. Ltd. (“CLA”), is proposing a strategic restructuring to sharpen its business focus, optimise growth and create shareholder value through a Scheme of Arrangement (the “Scheme”):
- Consolidate the Group’s investment management platforms and lodging business into CapitaLand Investment Management (“CLIM”), which is to be listed by introduction on the Singapore Exchange (SGX)
- Privatise CapitaLand, and Group’s real estate development business, to be fully held by CLA on completion of the Scheme
2. What is the rationale for the proposed transaction?
Proposed restructuring is a continuation of our CapitaLand 3.0 transformation that started when we acquired Ascendas-Singbridge in 2019, and aims to further accelerate our stated transformation and business objectives.
The creation of CLIM will place greater focus on our asset light business. As a global Real Estate Investment Management (“REIM”), CLIM will seek to further grow its current Funds Under Management (“FUM”) of S$78bn, as well as Fee-related Earnings (“FRE”), while retaining its asset light business model.
CapitaLand, holding the Group’s real estate development business which typically holds longer gestation projects that require more patient capital, will be taken private by CLA.
Both CLIM and CapitaLand’s real estate development businesses are valued differently by the public markets, and the proposed restructuring aims to create shareholder value.
While CLIM and CapitaLand are and will be separate entities with distinct mandates, they will continue leveraging on each other’s strengths within the CapitaLand ecosystem.
3. What are the proposed terms of the transaction? How has it been determined?
Eligible Shareholders are expected to receive implied value of S$4.102 per share for every one CapitaLand share they own in the form of:
- 1 CLIM share at S$2.823, valued at 1x pro forma NAV as at 31 Dec 2020 for illustrative purposes(1),(2)
- S$0.951 of Cash Consideration(3)
- 0.155 CapitaLand Integrated Commercial Trust (“CICT”) Units at S$0.328(4),(5),(6)
On a fully diluted share capital basis(7),
- Cash Consideration remains fixed at S$0.951
- Eligible Shareholders will receive 0.143 CICT Units at S$0.303, given that the total CICT Units of 388,242,247 that CapitaLand will be distributing is fixed
Proposed transaction at an implied value of S$4.102 per share represents a significant premium to CapitaLand’s share price:
- 24% above the last traded price of CapitaLand as at 19 Mar 2021, being the last full trading day (the “Last Trading Day”) immediately prior to the date of the Joint Announcement (the “Joint Announcement Date”)
- 27% above the one-month volume-weighted average price (“VWAP”) as at 19 Mar 2021
4. What is the value of the 1 CLIM share which Eligible Shareholders are receiving?
The pro-forma NAV of CLIM as at 31 Dec 2020 is S$2.823 per share.
As CLIM will only be listed by way of introduction post effective date of the Scheme, which is expected to be in or around 4Q 2021, the trading price of CLIM share will be determined based on market trading.
Please refer to Page 6 of the Announcement Presentation of trading pattern of Real Estate Investment Management companies.
5. How will the total CICT Units change as a result of this proposed transaction? Is CICT raising new equity as part of the transaction?
As part of this proposed transaction, CapitaLand will be distributing 388,242,247 CICT Units, representing approximately a 6.0% interest in CICT to CapitaLand shareholders.
For every one CapitaLand share owned, an Eligible Shareholder is expected to receive 0.155 CICT Units at S$0.328.
No new CICT Units are issued, and thus, there will be no change in the total CICT Units.
6. When will CapitaLand’s Eligible Shareholders get CICT Units and cash?
CICT Units and cash will be distributed upon completion of transaction, which is estimated to be in or around 4Q 2021.
Further details on settlement date will be provided at a later stage.
7. What is CLIM’s dividend payout policy?
Further details on CLIM’s dividend payout policy will be disclosed in due course.
8. Will I still receive the declared FY 2020 dividends of S$0.09 per share?
On 24 Feb 2021, CapitaLand announced a proposed tax-exempt ordinary dividend of S$0.09 per Share for the financial year ended 31 December 2020 (“FY 2020 Final Dividend”).
The Cash Consideration of S$0.951 per CapitaLand share will not be reduced by the amount of the FY 2020 Final Dividend.
FY 2020 Final Dividend entitlements will be based on the CapitaLand shares held by Shareholders as at the record date for the FY2020 Final Dividend.
The proposed FY 2020 Final Dividend is subject to shareholders’ approval at CapitaLand’s upcoming AGM.
9. Will CLIM’s shareholders still get to participate in the real estate development business?
CLIM will primarily focus on expanding its asset light business model, and further accelerating growth of its FUM as well as FRE.
CLIM can still participate in the real estate development business through potential strategic arrangements between CLIM and CLA that are currently being negotiated.
Further details on strategic arrangements will be disclosed in due course.
10. When is the EGM and Scheme Meeting? Will there be a physical venue in light of COVID-19?
The EGM and Scheme Meeting are expected to be in or around 3Q 2021.
Further details will be announced in due course.
11. When would the EGM and Scheme Meeting results be known and how would they be announced?
The results of the votes on the resolutions to be approved at the EGM and the Scheme Meeting will be shared at the relevant meetings once the votes have been tabulated.
CapitaLand will also make an announcement on the results of the votes on the resolutions after the EGM and the Scheme Meeting on the same day and the announcement may be viewed on the SGX-ST and on CapitaLand’s website.
12. Will CLA be allowed to vote at the EGM and Scheme Meeting?
No, CLA and its concert parties will abstain from voting.
13. Will CLA be making an offer to acquire CICT or any of the other CapitaLand’s listed REITs/BTs?
CLA is not required to make any chain offers for CICT or any of the other CapitaLand’s REITs/BTs listed on the SGX as a result of the proposed transaction.
14. How will this proposed transaction affect business activities of CapitaLand, CICT and their other listed REITs/BTs?
The proposed transaction involves restructuring of CapitaLand, as well as DIS of CICT Units to its shareholders.
The proposed transaction is not expected to affect the day-to-day business activities and ongoing operations of CapitaLand’s listed REITs/BTs. The listed trusts can continue to invest independent of the on-going process of the proposed restructuring subject to each listed trust’s financial considerations. In other words, it is possible for a listed trust to undertake acquisitions or disposals, subject to such trust’s financial and strategic considerations, while the restructuring is on-going.
15. How is the distribution of the assets between CLIM and CapitaLand decided?
The assets distribution is proposed based on factors such as readiness of the assets to be offered to the CL listed trusts, tax consideration and other specific asset level considerations.
16. When will CapitaLand be delisted and CLIM start trading on SGX-ST?
Expected to be in or around 4Q 2021.
Further details will be announced in due course.
(1) Based on CLIM’s pro-forma NAV of S$14.7B as at 31 Dec 2020, adjusted for transaction costs. CLIM is valued at 1x NAV for illustrative purpose to determine implied consideration
(2) Based on 5,202,962,608 CapitaLand shares outstanding as at 19 Mar 2021
(3) The aggregate Cash Consideration that is payable by CLA to any Eligible Shareholder as at the Record Date in respect of the shares held by such Eligible Shareholder will be rounded to the nearest whole cent
(4) The number of CICT Units which each CapitaLand Eligible Shareholder shall be entitled to pursuant to the Scheme shall be rounded down to the nearest whole number, and fractional entitlements shall be disregarded
(5) 388,242,247 CICT Units divided by 5,202,962,608 total CapitaLand shares as at 19 Mar 2021. CLA will not participate in the DIS of CICT Units and CLA’s share of DIS of CICT Units will be distributed to Eligible Shareholders as part of the Scheme
(6) Based on CICT’s 1M VWAP of S$2.122/unit as at 19 Mar 2021
(7) Assuming conversion of all outstanding convertible bonds, vesting of awards between Joint Announcement Date and Scheme Effective Date and estimated number of ordinary shares to be issued as payment of director fees
The directors of CapitaLand (including any who may have delegated detailed supervision of the preparation of these FAQs and responses) have taken all reasonable care to ensure that the facts stated and all opinions expressed in these FAQs and responses in each case which relate to CapitaLand, CLIM and CICT (excluding information relating to CLA or any opinion expressed by CLA) are fair and accurate and that, where appropriate, no material facts which relate to CapitaLand, CLIM and CICT have been omitted from these FAQs and responses, and the directors of CapitaLand jointly and severally accept responsibility accordingly.
Where any information which relates to CapitaLand, CLIM and CICT has been extracted or reproduced from published or otherwise publicly available sources or obtained from CLA, the sole responsibility of the directors of CapitaLand has been to ensure that, through reasonable enquiries, such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in these FAQs and responses. The directors of CapitaLand do not accept any responsibility for any information relating to CLA or any opinion expressed by CLA.