Raffles Education Announces Major S\$121.8 Million Property Disposal

Key Highlights from the Proposed Sale of 51 Merchant Road

Raffles Education Limited has announced a significant corporate development that may have material impact on its share value and investor outlook. The company, through its Singapore-incorporated subsidiary Raffles Assets (Singapore) Pte. Ltd., has entered into a binding sale and purchase agreement (SPA) to divest its flagship property at 51 Merchant Road, Singapore 058283 for a total consideration of S\$121,800,000 (exclusive of GST).

1. Transaction Overview

• Asset Involved: The property is a prominent 4-storey commercial building with two basement levels of carpark, annexed to conserved buildings. It sits on a 2,570.5 square metre plot with a gross floor area of 6,606.43 square metres. The site is held on a 99-year lease expiring in 2092.
• Buyer Details: The purchaser, 51 Merchant Road Pte. Ltd., is an independent third-party company engaged in the business of letting self-owned or leased real estate. There are no shareholding or related party interests between the buyers and Raffles Education’s directors or controlling shareholders.
• Purchase Price: The total consideration is to be settled fully in cash.
• Payment Terms:
  • 5% deposit (S\$6,090,000) payable upon signing, held in escrow.
  • 95% balance (S\$115,710,000) payable on completion.
• Valuation & Book Value:
  • Book value as at 30 June 2025: S\$68,267,000.
  • Recent market valuation (25 June 2025): S\$152,700,000.
• Completion Timeline: Anticipated completion is 30 January 2026, with the vendor having the right to extend this date up to two times, but not more than three months from the original date.

2. Major Transaction Classification & Shareholder Approval

• The transaction qualifies as a “major transaction” under Chapter 10 of the SGX Listing Manual. This is due to the aggregate value of the sale (79.6% of the Company’s market capitalisation of S\$153.1 million).
• Shareholder approval at an Extraordinary General Meeting (EGM) is required. A circular detailing the rationale, financial effects, and other relevant information will be sent to shareholders ahead of the EGM.

3. Strategic Rationale & Use of Proceeds

• Balance Sheet Optimization: The company seeks to optimize its capital structure by eliminating the property’s associated loan and interest burden.
• Capital Redeployment: Proceeds will be used to strengthen working capital and fund higher-yielding business initiatives, converting a non-income-generating asset into liquidity for strategic growth.
• Estimated Net Proceeds: Approximately S\$121.3 million after deducting transaction costs (estimated at S\$500,000).
• Gain on Disposal: The sale is expected to generate a one-off gain of approximately S\$53.0 million over the book value of the property.

4. Financial Impact for Shareholders

• Net Tangible Asset (NTA) per share:
  • Before disposal: S\$0.3915
  • After disposal: S\$0.4296
• Earnings per share (EPS):
  • Before disposal: S\$0.0055
  • After disposal: S\$0.0477
• Profit attributable to shareholders will increase from S\$7.7 million to S\$66.3 million assuming the disposal had been effective from 1 July 2024.

5. Conditions Precedent & Potential Risks

• The sale is subject to the fulfillment (or waiver) of several conditions, including:
  • Shareholder approval at both vendor and purchaser level
  • Consent from the head lessor
  • No breaches of lease terms or outstanding sums
  • Completion of any necessary rectification works
  • Standard legal requisitions
• Completion is not guaranteed until all conditions are met. Shareholders are advised to exercise caution when dealing in the Company’s shares until further updates are announced.

6. Other Noteworthy Points

• No new directors or service contracts are being proposed in connection with this transaction.
• Directors and controlling shareholders have declared no interest in the transaction, other than through their existing roles and shareholdings.
• Inspection of Key Documents: The SPA and property valuation report will be available for inspection at the company’s registered office for three months from the announcement date.

7. Implications for Shareholders & Potential Share Price Impact

• This announcement is potentially price-sensitive given the major positive impact on profitability, NTA, and debt reduction.
• The transaction, if completed, is expected to strengthen the company’s financial position and could provide resources for further value-accretive initiatives.
• However, there is still completion risk due to the conditions precedent. Shareholders should monitor further announcements closely.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should consult their own professional advisors before making any investment decisions. All information is based on company announcements and is subject to further updates.

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