Keppel shares may be in focus as its plan to sell China marina project hits another roadblock

Singapore five-dollar note Photo by Leslie Shaffer

Shares of Keppel Corp. may be in focus again on Thursday after the company said in a filing after the market close that its protracted battle to sell its stake in a China marina project still hadn’t reached a conclusion.

The company’s plan to sell a stake in a China marina project for 2.9 billion yuan (around S$605 million) had been blocked since November by minority shareholder Sunsea Yacht Club filing a court case in Singapore to scuttle the deal, the Business Times reported in November.

Fully owned Keppel unit Keppel Land China Ltd. had inked a deal to sell its fully owned unit, Keppel China Marina Holdings, which owned 80 percent of the Keppel Cove residential and marina project, to a unit of Hong Kong-listed Logan Property for 2.9 billion yuan, the Business Times report said.

The remaining 20 percent of the Keppel Cove project is held by Sunsea Yacht Club.

Short-lived jubilation?

At a hearing on Monday, the Court of Appeals dismissed Sunsea Yacht Club’s case and awarded costs to Keppel’s units, Keppel said in an SGX filing on Monday.

But any jubilation proved short-lived.

Sunsea Yacht Club initiated arbitration proceedings on Monday against Keppel’s fully owned unit Keppel China Marina Holdings over claims related to Sunsea Yacht Club’s joint venture with KCMH, Keppel said in an SGX filing on Wednesday after the market close.

“The company is of the view that claims made by SYCHK in the arbitration are without merit, and KCMH will accordingly vigorously defend itself,” Keppel said in Wednesday’s filing. “KLCL will continue to take appropriate steps to complete the divestment.”

According to the Business Times report in November, if the deal proceeds, Keppel Land China would recognise a gain of around S$290 million.

By way of comparison, for 2017, Keppel reported net profit of S$217 million, although that was down from S$784 million in 2016 due to financial penalties related to resolving allegations of corruption in relation to contracts In Brazil.

Shenton Wire was unable to contact Sunsea Yacht Club for comment.

Shares of Keppel ended down 0.74 percent at S$8.04 on Wednesday.