MAINBOARD-LISTED Asia Food & Properties (AFP) announced yesterday that it plans to spin off its China property business into a separately listed company to handle its investments there.
The news led to frenzied trading in AFP, with 11.7 million shares changing hands as the share price soared by 25 cents, or 62.5 per cent, to close at a one-year high of 65 cents.
Under the proposed scheme, AFP shareholders will be granted shares in newly formed Singapore-listed Bund Center Group, in proportion to their AFP shareholdings.
The new company will be a China-centric property company, while AFP will focus on the South-east Asian property market.
The split will allow the companies to independently establish business strategies. This means they can effectively adapt to the different market conditions in the two regions, said AFP.
The exposure of AFP and Bund Center to regional economic risks will also be reduced, while their financial independence will facilitate access to capital markets for debt and equity funding, it added.
The demerger is conditional upon the approval of AFP’s shareholders, and on Bund Center receiving approval to list on the Singapore Exchange.
As part of the exercise, AFP will be subject to a capital reduction, and will not hold any shareholding in Bund Center immediately after the split.
Shareholders will hold shares in both AFP and Bund Center, so the move will give them investment flexibility, said AFP.
Other than its property investments, AFP is also involved in the production, distribution and sale of snack noodles and instant noodles in China. The food business will stay under AFP’s control.
AFP will also retain control of properties currently being redeveloped in Chengdu and Shenyang, as well as some land in Zhuhai, although it is looking to sell these assets eventually.
Source : Straits Times – 25 Sep 2009
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