GSM Building En Bloc High Court Result – Sale Order Granted!
High Court Clears Path for GSM Building’s $80 Million Sale to LHN’s Coliwoo
In a significant legal ruling, the High Court of Singapore has given the green light for the sale of GSM Building to LHN Group’s subsidiary, Coliwoo, for a sum of $80 million.
This decision comes after a meticulous review of objections raised by minority owners, who argued that the sale price was too low and that the Collective Sales Committee (CSC) had shown undue preference to Coliwoo.
Court Dismisses Minority Owners’ Concerns
The minority owners had expressed concerns that the CSC did not secure the best possible price for the property, alleging favoritism towards Coliwoo by allowing them “special” permission to apply for a change of use with the Urban Redevelopment Authority (URA) even before the property was relaunched for tender.
However, Judicial Commissioner Christopher Tan found these claims unconvincing and stated that the pre-tender dealings between the CSC and Coliwoo were appropriate.
According to Tan, facilitating potential purchasers in overcoming obstacles to place more attractive bids, even before the tender process, was not improper.
Detailed Examination of the Sale Process
The High Court’s review revealed that during the previous tender which closed in September 2022, GSM Building had attracted potential buyers including Amberdale Properties and Keaf Investments.
Despite Keaf expressing interest in participating in future tenders with a potential offer of up to $85 million, negotiations fell through.
The subsequent tender in January 2023 did not include outreach to Keaf, a point of contention for the objectors.
However, Commissioner Tan did not see this omission as sufficient to constitute a lack of good faith by the CSC.
Financial Justifications and Tender Duration Concerns
The CSC’s decision to accept Coliwoo’s $80 million offer, which was free from uncertainties related to Goods and Services Tax (GST), was deemed justified by Tan amidst financial uncertainties.
Moreover, the length of the tender period, which was shortened to 17 days including the Chinese New Year holiday, was not seen as indicative of bad faith.
This decision was partly influenced by the potential of securing a firm offer from Coliwoo, which was perceived as a “bird in hand.”
Legal and Valuation Insights
The court also addressed concerns about the building’s valuation which did not factor in its existing higher gross plot ratio (GPR) of 5.2, compared to the Master Plan’s GPR of 4.2.
The CSC’s failure to obtain a fresh valuation considering a proposed change from commercial to serviced apartments was noted, but not deemed to reflect a lack of good faith.
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Outcome and Future Prospects
Ultimately, the High Court’s ruling facilitates the sale of GSM Building, marking an end to the controversies surrounding this collective sale process.
The CSC’s various missteps were acknowledged but were not deemed severe enough to indicate bad faith.
Looking ahead, LHN plans to maintain the commercial use for the first two levels of the building and convert the upper levels into serviced apartments, indicating a strategic redevelopment approach that aligns with the current market dynamics.
This ruling is expected to set a precedent for future collective sales, particularly in how CSCs handle the tender process and negotiations.
It underscores the importance of transparency and good faith in achieving fair outcomes for all parties involved in such significant property transactions.
The public tender for GSM Building drew to a close with this judicial endorsement, paving the way for its transformation under new ownership.
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