Orchard Parade Hotel

OPH: will seek sh/h approval to list its 3 hotel assets through a REIT, and get permission via an EGM, to acquire hospitality mgt and certain health-care assets from its parent, Far East Organization. Under the plan, OPH will divest Orchard Parade Hotel, Albert Court Village Hotel and Central Square Village Residences into a proposed Far East Hospitality Trust for at least $702m, and take a 33% stake in the REIT mgr and trustee-mgr. OPH also proposes to acquire 45 medical suites in Novena Medical Center, 48 medical suites in Novena Specialist Center, and the entire hospitality mgt arm of Far East Organization. To help pay for this purchase, the company will divest a majority of its 49.5% stake in Yeo Hiap Seng - cutting it to a 14.5% interest - at a 40.6% premium to the stock's last traded price. The remaining costs will be paid for in cash, tapping proceeds from the planned REIT listing. OPH also is proposing a special dividend of 12 cts/sh, and a dividend in kind of the co's remaining 14.5% stake in Yeo Hiap Seng - amounting to ~ 0.229 YHS sh for each OPH, as of May 31. However, if plans for the REIT listing fall through, OPH will also abandon the proposed acquisition of assets from Far East and disbursement of dividends. OPH will ask sh/h for permission to change its name to "Far East Orchard Ltd." Nevertheless, DJ Newswires notes, traders shouldn't get overly-enthusiastic despite the recent similar experience of Fragrance, as even if shareholder approval is received, it can be a long time before an actual listing, especially amid market turmoil. Adds, OPH free-float is low at 35.07%, with nearly 65% held by insiders, and trade is typically thin. OPH is +15.4% at $1.875, marking a new multiyr high.