Keppel DC Reit proposes sale of M1-issued NetCo bonds, preference shares
This comes after parent company Keppel announced that it will sell M1's telco business to Simba Telecom , a mobile network operator, for S$1.43 billion. Keppel will receive nearly S$1 billion for its 83.9 per cent effective stake in M1.
Simba – whose parent company is Tuas Ltd, which is owned by Australian businessman David Teoh's TPG Telecom – is expected to create more revenue pools and career opportunities from its combination with M1.
NetCo is a subsidiary of M1 and holds some of the telco's mobile, fixed and fibre assets. It also has a network services agreement with M1.
On Dec 22, 2021, Keppel DC Reit subscribed to S$88.7 million in bonds issued by NetCo through its trustee, Perpetual (Asia). Under the terms, the Reit will receive S$11 million a year, comprising both the principal amount and interest, for a period of 15 years from the date of issuance.
Under the same transaction, Keppel DC Reit also subscribed to 100 per cent of the preference shares issued by NetCo, for S$1 million.
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These shares entitle the Reit to have 50 per cent representation on NetCo's board of directors – a move intended to give it additional protection for its investment in the bonds.
The NetCo bonds and preference shares will be sold to an unrelated third party, which is a Singapore-incorporated holding company, Keppel DC Reit's manager said.
Assuming the sale was completed on Monday, the buyer will have to pay around S$79.2 million, the manager said. This amount comprises S$77.2 million as a principal amount for the NetCo bonds, S$1 million in accrued interest, and a principal amount of S$1 million for the preference shares.
The deal is subject to clearance from the Infocomm Media Development Authority.
Units of Keppel DC Reit were trading flat at S$2.31 as at 3.30 pm on Monday.
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