SINGAPORE (Mar 15): Chip Eng Seng is making a clean break from the Tower Melbourne project in Australia.

Wholly-owned subsidiary CES-Queen (Vic) (CESQ) is selling the property located at 150 Queen Street for A$55 million ($56.6 million).

CESQ had originally acquired the commercial building in September 2011 for redevelopment into a 71-storey tower with 581 freehold residential units called Tower Melbourne.

However, due to protracted legal proceedings with the owner of the adjoining property over demolition works which were being carried out on the property, the timeline for the completion of Tower Melbourne was delayed indefinitely, said Chip Eng Seng in a Thursday filing.

See: Termination of Tower Melbourne leaves Chip Eng Seng unscathed; may turn out to be blessing instead

On Nov 27 2017, Chip Eng Seng announced the company had started the termination of the sale contracts entered into by CESQ with purchasers of units in Tower Melbourne and exploring other viable exit options with regard to the property, including putting it up for sale. Meanwhile, CESQ had also entered into a deed of settlement with the adjoining property owner to arrive at a settlement with respect to the ongoing legal disputes.

"The company considers the sale of the property to be its most viable option at this point in time," says Chip Eng Seng.

"The opportunity to sell the property presents the company with a clean exit from the Tower Melbourne project given that is it no longer feasible for the company to move forward with the project."

Continuing to hold on to the property with the legal proceedings remain unresolved would mean incurring additional expenses to keep the site secure.

"The sale will therefore allow the company to unlock some value from the property and the net proceeds from the proposed disposal will provide the group with additional working capital to fund the operations and expansion of its businesses and also to undertake new acquisition opportunities that may arise in the future," says Chip Eng Seng.

In addition, the adjoining property owner is concurrently selling its adjoining property, located at 140 Queen Street and 21-27 McKillop Street, as part of the same sale process.

This presents an avenue for CESQ and the adjoining property owner to work towards a speedy out-of-court settlement of the disputes with the other property owner.

Shares in Chip Eng Seng closed at 94 cents on Thursday.