Horizon Towers Hearing - Majority Owners Fault Sales Committee

Source : The Business Times, November 16, 2007

It should have reverted to them before closing deal at just reserve price

MORE displeasure was expressed at the Strata Titles Board (STB) hearing into the Horizon Towers sale yesterday - this time, not from the minority owners who opposed an en bloc sale but the majority owners who agreed to it.

They found fault with the sales committee's efforts, particularly, its failure to consult owners about going ahead with an offer from Hotel Properties Ltd (HPL) and its partners, which just met the reserve price of $500 million, set months before property prices started surging.

Majority owner Poonam Harilela, whose family owns several units in the development, said that they agreed to the en bloc sale in April 2006 because they were told by the sales committee they would get an 80 per cent premium if they sold their units collectively rather than individually.

But by January 2007 - around the time the sales committee signed the deal with HPL and its partners - that premium had dwindled significantly.

Ms Harilela said that her father's unit attracted an offer of more than $2 million in December 2006 - close to what it would get in a collective deal - so it did not make sense to sell it en bloc.

She conceded that the quantum of the premium was not guaranteed by the sales committee.

'But the reason we went for the en bloc was the premium, because it could better our lives,' she said.

'The main reason why we wanted to sell was to upgrade our lives, not to downgrade and have nowhere to live.

'We're not talking about the stock market, we're talking about a home. And at that point in January 2007, the prices were so high we couldn't get a replacement unit. And that's the point,' said Ms Harilela, who has lived in Horizon Towers for 17 years.

She acknowledged that the collective sale agreement signed by the consenting owners was legal and binding and gave authority to the sales committee to sell the development as long as the reserve price of $500 million was met.

She said that this was why she approached sales committee chairman Arjun Samtani - before the deal was sealed - to ask if the committee could reconsider selling the development en bloc.

A second witness yesterday, Mohinder Kalra Singh, testified in his affidavit that the sales committee failed to go back to the consenting owners to ask them whether they wanted to proceed with the HPL offer.

The hearing before STB was concluded yesterday.

The various parties have until Nov 23 to make their closing submissions to the tribunal and until Nov 30 to make their replies.

The STB tribunal will then deliberate and announce its decision by Dec 7 - just before the sale completion deadline of Dec 11.

If the tribunal approves the sale and grants Horizon Towers a collective sale order, the minorities still have the right to appeal against that decision.

If the STB decides not to grant an order and the sale falls through, HPL may go ahead with the lawsuit it has filed against the majority owners for breach of the sale and purchase agreement.