Published March 14, 2009

FairPrice sub-underwrites CapitaMall rights issue

It will take up to 27m rights units if issue is not fully subscribed

By JAMIE LEE

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SINGAPORE'S largest supermarket chain NTUC FairPrice has agreed to spend as much as $22.1 million to buy up to 27 million rights units in CapitaMall Trust (CMT) if the issue is not fully subscribed.

SUB-UNDERWRITING ROLE As a sub-underwriter, NTUC FairPrice will receive a fee of $332,100, or 1.5 per cent of the price for the 27 million rights units

The sub-underwriter arrangement comes under a standby purchase agreement. The 27 million units represent about 1.8 per cent of the rights units that have been offered by CMT and, if fully allocated to NTUC FairPrice, will raise its substantial stake from 6.35 per cent to 7.3 per cent. This also assumes that the groceries retailer fully subscribes for its own entitled rights shares.

As a sub-underwriter, NTUC FairPrice will receive a fee of $332,100, or 1.5 per cent of the price for the 27 million rights units.

The standby purchase agreement was inked between NTUC FairPrice and the joint lead managers and underwriters.

CMT said that the commission that NTUC FairPrice earns is part of the commission paid to the joint lead managers and underwriters - DBS and JPMorgan.

NTUC FairPrice has been a substantial unitholder of CMT.

Early last month, CMT announced a nine-for-10 rights issue to raise $1.23 billion.

The 1.5 billion units are to be issued at 82 cents apiece. Most of the funds raised would be to repay borrowings, CMT had said.

NTUC FairPrice has been a substantial unitholder of CMT since the trust was listed in 2002.

The supermarket was set up by unionists in the 1970s to 'help moderate the cost of living for low income households in Singapore', its website said.

NTUC FairPrice's group net profit after contributions for the year ended March 31, 2008, fell 23.8 per cent to $63.3 million from $83.1 million. This followed higher contributions to Singapore Labour Foundation.

Total cash in its coffers stood at $290 million as at end-March 2008, compared with $224 million a year earlier.