Fabchem China, on March 19, entered into a sale and purchase agreement (SPA) with its controlling shareholder, Triple Vision, to dispose of 100% of its stake in Shandong Yinguang Technology for $18 million.
The $18 million will be paid to Fabchem China in cash by Triple Vision.
Fabchem China’s stake in Shandong Yinguang Technology amounts to RMB156 million ($32.1 million).
Subsequent to the proposed disposal, Fabchem China intends to undertake a capital reduction exercise under the Companies Act (Cap 50) of Singapore for a cash distribution to all shareholders of the company at 36.8 cents per share.
The proposed disposal is deemed an interested person transaction under SGX-ST’s listing rules.
Upon the completion of the disposal, Shandong Yinguang will cease to be a subsidiary of Fabchem China.
Triple Vision is a private company incorporated on April 12, 2018, with an issued and paid-up capital of $10 comprising 10 ordinary shares. It is a management consultancy services company and its sole shareholder and director is Henry Wee.
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As at March 19, Triple Vision is a controlling shareholder of Fabchem China, with a 52.16% stake in the company.
Together with the shares Wee has, Triple Vision has a total direct and deemed interest in 24.5 million shares or 52.38% of the entire issued and paid-up capital of Fabchem China.
Yinguang Technology is the sole operating and principal subsidiary of Fabchem China. It produces explosive devices (boosters) in China, which are widely used in the mining, energy exploration, hydroelectric and infrastructure construction sectors.
Fabchem China’s cost of investment in Shandong Yinguang was $22.5 million or RMB112.1 million based on the exchange rate as at Sept 30, 2020.
Based on the disposal consideration, the loss on disposal would be $4.5 million, or RMB22.6 million.
The book value and net tangible assets (NTA) of Shandong Yinguang was at RMB155.3 million as at Sept 30, 2020.
The disposal consideration was at a discount of RMB65.7 million to the NTA of Shandong Yinguang.
As Fabchem China owes $200,000 to Triple Vision as at March 19, which will be deducted from the payment from Triple Vision upon the sale of the shares in Shandong Yinguang.
Shares in Fabchem China closed flat at 17.4 cents on March 19.
