Saturday, January 19, 2008

The majority owners of Regent Garden, a 31-unit development in West Coast Road, are trying to back out of a deal with Allgreen Properties

Majority owners go to court claiming collective sale price undervalues site

ANOTHER collective sale dispute is brewing, but this time, those locking horns with the developer are the majority owners. Usually, the minority owners are the ones who take the lead in contesting such sales.

The majority owners of Regent Garden, a 31-unit development in West Coast Road, are trying to back out of a deal with Allgreen Properties .

Quite often, collective sale disputes have been triggered by unhappiness on the part of minority owners, as with the ongoing Horizon Towers case.

The Regent Garden owners inked a sales agreement in April last year to sell their property to mainboard-listed Allgreen for $34 million.

However, in a statement from Allgreen to the Singapore Exchange yesterday, the company disclosed that the majority owners are asking the High Court to release them from the agreement.

Alternatively, the owners want to get damages of between $5.7 million and $6.685 million from Allgreen.

Allgreen said in the same announcement that it intends to ‘vigorously contest this action, and the claims and allegations made by the majority vendors’. The firm maintains that the deal remains valid and binding at the original sale price of $34 million.

Allgreen has also gone to the High Court, to ask it to order the majority owners to complete the transaction by Feb 28.

According to documents seen by The Straits Times, the majority owners, who own 25 of the 31 units, signed the deal last April. By November, the minority owners had agreed to the deal and withdrawn the objections they had filed with the Strata Titles Board.

However, the majority owners, through their lawyers, wrote to Allgreen last month, claiming the sale price of $34 million was a ‘mutual fundamental mistake’.

It arose because the sale proceeds assumed a development charge payable of $7.2 million when the owners had expected a charge of only $950,000. So the sale price was at ‘a gross undervalue’.

The minority owners also appear to have been paid extra. But the majority owners say Allgreen has refused to give them these details.

To this, Allgreen points out that its bid of $34 million was the highest among all the bids. It was also $4 million higher than the reserve sale price.

It disagrees that a mistake was made. It says the sales committee had made a conscious decision not to obtain the actual baseline plot ratio - which affects the development charge - from the Urban Redevelopment Authority before the deal was struck.

According to Allgreen, it had even offered a floating sale price, which would be subject to the development charge, but the sales committee wanted to fix the price - in order to be guaranteed certainty of sale.

Only later did the majority owners ask a property consultancy to put together a valuation report using the actual baseline plot ratio. This resulted in a higher valuation of Regent Garden.

Allgreen says such assertions are ‘nothing more than belated attempts to rewrite the bargain in the hope of extracting a higher price for Regent Garden’.

Source : Straits Times - 19 Jan 2008

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