The need to raise money is not a current requirement for UOL Group, though it is likely to weigh up a rights issue if it will need money for assets acquisition, said chairman Wee Cho Yaw the previous day at the 46th annual general meeting of the property company.
Several shareholders, who asked for detailed and incisive questions regarding the company’s financial status, were also pleased with the state of affairs of the company.
Mr. Wee obtained appreciations from a number of the shareholders due to his outstanding supervision of the company amid difficulties. Jimmy Tan, one of the shareholders, asked about the company’s cash flow and whether a rights issue would be considered by UOL.
UOL group Chief Executive Gwee Lian Kheng said that the company is set to receive payments for the projects they have sold over the past two years. PJ Smith, another shareholder, commented that the company’s gearing had increased twofold to 42 percent from 2007’s 21 percent, “which in today’s market conditions is quite high”.
According to Mr. Smith, the company only has three projects finishing for the current year. He also inquired if there would be sufficient funding to pay off the loans of UOL which must be paid this year.
Mister Smith added that the company has total borrowings of $1.8 billion and capital expenditure commitments of $211 million, as well as more than half a billion in loans which are due this year.
Around $190 million of the $211 million capital expenditure commitment represents the Upper Pickering Street proposed development which has been delayed for a year, said Mr. Gwee. It is a city hotel possessing around 44 office/home and 365 rooms units.
Mr. Wellington Foo, UOL chief financial officer, said that the group’s short- term loans are “on an annual rollover basis” and that they are dealing with banks about loan renewals.
Mr. Smith also intended to know why it was quite difficult for the company to maintain the 2008’s final dividend of 10 cents as the lower net profit was attributable to the adjustment for fair-value loss on investment properties, which was “a non-cash item and has no effect on the cash flow”. For 2008, a smaller 7.5 cents dividend was declared by UOL.
Dividing the available-for-sale financial assets of the company to $696 million from $1.3 billion in 2007 was also asked by another shareholder.
CFO Mr. Foo stated that the assets were the shares of United Overseas Bank. He also added that the fall in the stock price caused the drop in value.
The meeting was finished after about half an hour. An extraordinary general meeting regarding a proposed share buyback resolution then followed.
At this moment, Mr. Wee left as he had to abstain, being an interested party. Another shareholder then inquired if the exemption given to the Wee family from the requirement to establish a general offer approved by the SIC or Securities Industry Council may be disconnected from the resolution. However, it was not possible.
Dilhan Pillay, UOL legal counsel, clarified that the Wee family, United Overseas Bank as well as Haw Par, being the concerted party group, already possess over 40 percent in UOL, consequently SIC’s exemption. According to the Takeover Code a shareholder plus its concert parties (unless exempted) must generate a general offer once the 30 percent mark is reached by their holdings.
The meeting went well with all the resolutions being passed.