Jurong project: Lucrum to invest at least $200m

Straits Times: Thu, Jan 05
IT LOOKS like third time lucky for beleaguered firm TT International (TTI) after two previous bids to secure a partner for a key $295 million development in Jurong East fell through.   Private equity investment company Lucrum Capital has agreed to…

IT LOOKS like third time lucky for beleaguered firm TT International (TTI) after two previous bids to secure a partner for a key $295 million development in Jurong East fell through.

Private equity investment company Lucrum Capital has agreed to pump at least $200 million into the firm’s Big Box project – an eight-storey warehouse and retail development.

The tie-up announced yesterday is the latest move in what has been a fraught process for TTI, whose financial security rests partly on Big Box being completed.

Construction was halted on the 5.6ha site next to Jurong East MRT station at the end of 2008 after the mainboard-listed firm ran into financial difficulties during the global financial crisis. A financial restructuring programme that started in 2010 is expected to be completed in 2015.

TTI executive director Julia Tong said the firm has met all its obligations so far. It has invested $95 million in the project, including the land cost and some foundation work.

Big Box – now expected to be completed by the end of next year – is the last and largest of four warehouse retail projects under the Warehouse Retail Scheme (WRS). The other three are stores for Ikea, Courts and Giant in Tampines.

In 2010, Boustead Singapore planned to pump in about $150 million into the project, but backed out saying the risks were untenable given the restrictions under the WRS.

Sembawang Equity Capital was then touted as a partner, but that eventually fell through in May last year.

The deal with Lucrum Capital gives the project new hope but it is still subject to certain approvals from creditors, regulators and shareholders, said TTI, which trades consumer electronics and provides warehousing and logistics services.

Lucrum Capital chairman Wong Ah Long said the project presents ‘a fantastic opportunity’ and that its location in the Jurong Lake District, which the Government has earmarked as the largest commercial centre outside the city, was key to the firm’s confidence. He added that the area has the potential to be another ‘Marina centre in five years’.

‘Other developers have already started work there like CapitaLand and Lend Lease. We believe we can tap on synergies with these other people… We can also position ourselves as a gateway to Malaysia through the second link,’ Mr Wong said.

CapitaLand and Lend Lease are separately working on retail cum office projects.

While Lucrum Capital had initial concerns with TTI’s creditor schemes, detailed discussion allowed the firm to overcome these worries.

‘One of the main differences between us and the other investors is that we believe in TTI and their business. We believe that when Big Box is completed and starts operating, they will turn it around,’ Lucrum Capital director David Batchelor said.

The $200 million investment in Big Box could come from a $250 million Lucrum (Singapore) Opportunistic Fund that the group recently raised. The deal will involve injecting TTI’s interest in the land into its wholly owned subsidiary Big Box.

Lucrum’s wholly owned unit, Lucrum Development (Singapore), will get the option to acquire up to a 49 per cent stake in the special purpose vehicle in the form of ordinary and preference shares.

esthert@sph.com.sg
Source: The Straits Times © Singapore Press Holdings Ltd

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