PEC, the plant and terminal engineering specialist, has, on May 6, entered into a sale and purchase agreement (SPA) with Huizhou Qi An Enterprise Management, Huizhou Mu Sheng Enterprise Management and Huizhou Ze Xi Enterprise Management (collectively known as the purchasers), for the sale of its 25% stake in its wholly-owned subsidiary, Huizhou Tianxin Petrochemical Engineering (Tianxin) for a total cash consideration of RMB7.5 million ($1.5 million).
Of the total amount, Qi An, Mu Sheng and Ze Xi will each pay RMB3.6 million, RMB2.1 million and RMB1.8 million respectively.
The purchasers will have to transfer their respective consideration amounts to PEC within three months of the date of execution of the SPA.
PEC, on the same day, entered into a shareholders’ agreement (SHA) with the purchasers in respect of the disposal.
SEE:Sunpower promotes senior finance manager to CFO as M&S disposal sees departure of CFO, CIO
Under the SHA, Tianxin will have a board of a maximum of four directors. PEC is entitled to appoint three directors, while the purchasers are entitled to appoint one director.
As at May 7, Tianxin has a registered capital of RMB15 million.
Based on the latest unaudited financial statements of Tianxin for the 1HFY2021 ended Dec 31, 2020, the book value of the sale equity in Tianxin was RMB7.5 million.
The net asset value (NAV) of Tianxin was RMB30 million.
The net profits before income tax of the company amounted to RMB11.5 million.
Following the completion of the disposal, PEC will have a 75% stake in Tianxin.
According to PEC, the disposal is part of its efforts to “ensure sustainable growth and [the] stable development of Tianxin”, as well as pave the way for the group to participate in local and government projects.
PEC intends to use the proceeds of the disposal for general working capital requirements.
Shares in PEC closed 1.5 cent lower or 3.3% down at 44 cents on May 7.
