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UOL Group does not need to raise money currently but may consider a rights issue if it needs money to acquire assets, chairman Wee Cho Yaw said yesterday at the property company's 46th annual general meeting.
Some shareholders, while asking pointed and detailed questions on the financial status of the company, also expressed happiness with the company's state of affairs.
Several of them thanked Mr Wee for his astute guidance of the company during the current trying times. Shareholder Jimmy Tan asked about UOL's cash flow and whether the company would consider a rights issue.
'If we need money to acquire assets, if necessary, I think we will do it,' said Mr Wee. But currently he did not see the need to do so.
Gwee Lian Kheng, UOL group chief executive, explained that UOL will be receiving payments for its projects sold over the last two years. Another shareholder, PJ Smith, noted that UOL's gearing had doubled to 42 per cent from 21 per cent in 2007, 'which in today's market conditions is quite high'.
Mr Smith said UOL has only three projects completing this year - one of which it owns about one-third of - and asked if there would be enough funding to repay the company's loans which are due this year.
UOL has $1.8 billion borrowings as well as capital expenditure commitments of $211 million and over half a billion in loans which have to be repaid this year, he said.
Mr Gwee said $190 million of the capital expenditure commitment refers to the Upper Pickering Street development which has been deferred for a year.
The proposed development is a city hotel with about 365 rooms and 44 office/home units.
On the group's short- term loans, UOL chief financial officer Wellington Foo said these are 'on an annual rollover basis' and that the group has been in discussions with banks about renewing the loans.
Mr Smith wanted to know why UOL could not maintain the same final dividend of 10 cents for 2008 as, after all, the lower net profit was due to adjusting for fair-value loss on investment properties, which is 'a non-cash item and has no effect on the cash flow'. UOL had declared a smaller 7.5 cents dividend for 2008.
'It's not quite fair,' Mr Smith said.
Mr Wee said he would look into the matter, adding: 'It's certainly an item we'll think about.'
Another shareholder asked about the halving of UOL's available-for-sale financial assets to $696 million from $1.3 billion in 2007.
CFO Mr Foo said the assets are United Overseas Bank shares and the drop in value was due to the fall in the stock price.
The meeting ended after 30 minutes, which was followed by the extraordinary general meeting on a proposed share buyback resolution.
Mr Wee left the meeting at this point because, as an interested party, he had to abstain. A shareholder asked if the exemption granted to the Wee family from the requirement to make a general offer granted by the Securities Industry Council (SIC) could be delinked from the resolution. It could not.
UOL legal counsel Dilhan Pillay explained that the concerted party group made up of the Wee family, Haw Par plus United Overseas Bank already own in excess of 40 per cent in UOL, hence the exemption by the SIC. Under the Takeover Code, unless exempted, a shareholder and its concert parties have to make a general offer when their holdings reach the 30 per cent mark.
All resolutions were passed and the more than 200 happy shareholders streamed out of the room to a buffet spread.
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