Koh Brothers Buys Out Brothers (Holdings) In Construction Venture

Source : The Business Times, December 31, 2007

KOH Brothers Group and Brothers (Holdings) are terminating their deal over joint venture Construction Consortium.

The companies said separately over the weekend that Construction Consortium would become a wholly owned subsidiary of Koh Brothers.

Brothers (Holdings) agreed last Friday to sell its 46.58 per cent stake in the venture to its partner for $18.97 million. It said that the proposed disposal would strengthen its overall financial position - about $99 million of securities (including performance bonds, corporate guarantees and indemnities) that it furnished in support of Construction Consortium's contractual and financial obligations with third parties will be assumed by Koh Brothers.

Construction Consortium undertakes building and civil engineering construction contracts for both public and private sectors and is also involved in the production of ready-mix concrete and cement as well as rental of concrete pumps.

Koh Brothers said that Construction Consortium accounted for 30.37 per cent of pre-tax profit for the year ended Dec 31, 2006.

As at Dec 15, 2007, the venture's construction order book stood at some $848.1 million for projects in Singapore, of which $312.8 million is still to be recognised.

Koh Brothers is bullish on the sector, citing Building & Construction Authority data that actual construction demand for the first 10 months of the year reached $18.5 billion and that it is likely to carry over into 2008 and 2009.

The latest deal follows a share swap between Koh siblings in January, under which Koh Brothers aims to focus on its construction and property business in Singapore.

Koh Brothers founder and chairman Koh Tiat Meng, and his wife, acquired 6.72 per cent of the company from Mr Koh's brother, Tiak Chye.

In return, they transferred 12.67 per cent of Brothers Holdings to him.

Mr Koh Tiak Chye also stepped down as chief executive officer and managing director of Koh Brothers and resigned as director in the company's subsidiaries and associate companies - except for those related to Construction Consortium.

This is so that he can focus on his commitments in Brothers (Holdings), particularly the company's real estate business in China.