[url]http://www.businesstimes.com.sg/sub/companies/story/0,4574,383877-1272916740,00.html?[/url]

Published May 3, 2010

[B][SIZE="5"]STC says it signed no deal on Orchard site[/SIZE][/B]

[B]It was initially lined up to redevelop OCBC's Specialists' Centre/Phoenix site[/B]

By SIOW LI SEN


STRAITS Trading Company (STC) never had an agreement with OCBC Bank on the development of the prime Specialists' Shopping Centre and Hotel Phoenix site in Orchard Road, said Chew Gek Khim, STC executive chairman.

'Contrary to popular belief, there was no agreement... there was nothing in writing,' said Ms Chew, the first time she has spoken publicly on the matter.

Ever since OCBC Bank announced in March that it is in talks with construction and property group United Engineers Limited to build a hotel and mall on the land, there has been speculation that relations between the bank and STC were no longer on the same footing as in the past.

STC was the original player lined up for the project. It had announced in January 2008 that it was in 'advanced negotiations' with OCBC about redeveloping the land.

STC used to be part of the OCBC/Lee family stable before the Tecity group acquired it in a high profile takeover in 2008.

Ms Chew is the granddaughter of the late Tan Chin Tuan, a past chairman of OCBC. Mr Tan set up Tecity, which had held a stake in Straits Trading since the 1950s.

Mr Tan also started the old 392-room Hotel Phoenix, which closed in August 2007 after 35 years. It has since been demolished.

'Well, put it this way, if you have nothing in writing, then all transactions should be viewed at commercially and arms length,' said Ms Chew in a recent interview.

'As a major shareholder of Straits Trading, I would want all transactions to be commercially beneficial to Straits Trading,' she said.

Tecity now owns 89 per cent of STC - a holding company with businesses ranging from smelting and mining to hotel investment and property development.

On why she engineered the takeover in 2008, Ms Chew said: 'That's too complicated.'

During the last two years she has been busy restructuring the company with a view to extracting the best value for shareholders. She has beefed up its management and recruited experienced professionals to run its businesses. Heading its property unit is Eric Teng who used to be chief executive of Tecity.

Iqbal Jumabhoy, who has worked in many listed companies, now runs the hospitality division. Maureen Leong who took the role of group chief financial officer was last at Sembcorp Industries.

STC is an investment company and its subsidiaries should be viewed as business investments, she said.

Does that mean every business is potentially for sale? 'If we are true to what we say, that we must realise shareholder value, anything at the right price we must consider it for sale. One should not be so married or so emotionally attached that nothing is for sale,' she said.

'But having said that, the considerations are plentiful; it cannot just be today's price, it cannot just be 10 per cent above today's price,' she said. The group is prepared to hold for 20-30 years if that's what it takes, in order for value to be realised.

Calling STC's real estate division as the 'meat' of the group, she is mulling over what the balance should be in terms of how much should be developed for sale and what to hold for rental income.

STC's real estate assets include its flagship Straits Trading Building, a 28-storey building at Battery Road, 4 developed bungalows and 5 plots of bungalow land in Cable and Nathan Roads, 38-unit Gallop Green condominium and a tract of land close to one million square feet in Butterworth, Penang.

Last month, STC announced it had bought over the development of 12 bungalows in Chancery Lane.

For 2009, STC posted net profit of $139.9 million, up 143 per cent from a year ago. The biggest contributor came from its property division which had a pre-tax profit of $135 million against $8.4 million in 2008.

Its 73 per cent Malaysia Smelting Corp Bhd (MSC) which is listed in Bursa Malaysia has decided to focus on its original core business, that of mining and smelting tin.

With the shift in direction, MSC has begun a divestment programme for all its non-tin assets. The non-core assets comprise mining stakes in companies in Australia, Philippines, Australia and Indonesia. MSC is one of the top three tin smelters in the world, she said. Tin prices have recovered this year. They are at US$19,000 per tonne versus US$12,000 last year.

Ms Chew also disclosed that for 2010, the remuneration committee has decided she will get a total package of $750,000, three times more than the $250,000 director's fee she received for 2009.