Engineering services company Advanced Holdings have announced that it plans to dispose of two of its subsidiaries for a total of $13.8 million.
On Oct 14, the company announced it has entered into two non-binding term sheets to dispose of the two subsidiaries.
The subsidiaries are Advanced CAE Pte Ltd in Singapore, known in the agreement as CAE SG, and Advanced CAE Limited in China, known in the agreement as CAE CN.
CAE SG will be sold for $3.2 million, and CAE CN will be sold for $10.6 million.
CAE SG will be sold to the Singapore-incorporated company Control and Application, a private company which is involved “in the business of whole trade of a variety of goods without a dominant product and investment holding.”
As at Oct 14, the shareholder of Control and Application is a Yang Xiao Fei, who holds 2.66% of Advanced Holdings.
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CAE CN will be sold off to the China-incorporated company Control and Application, a private company involved in the business of providing technical service, technical development, technical consultation, technical exchange, technology transfer and technology promotion.
Yang, along with a Xie Su Rong are the China-incorporated company’s shareholders.
The sale of CAE SG will result in a loss of $0.6 million to Advanced Holdings after a $6 million dividend distribution, and the sale of CAE CN will mean a loss of $3.4 million.
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CAE SG had a book value of $9.8 million, while CAE CN had a book value of $14 million.
The proceeds from the disposal will be divested into Advanced Holdings’s other businesses, namely, agritechnology and clean energy.
Advanced Holdings explains that the proposed disposals allow it to divest its underperforming businesses and limit its risks to the prolonged uncertainty of external economic factors.
Should the disposals go through, Advanced Holdings also will improve its cash reserves and will be able to redirect its managerial efforts into existing operations, expand into other businesses and undertake new investment opportunities that may arise in future.
The company’s board says that it is an “opportune and appropriate” time for the company to dispose of its existing business for a satisfactory consideration and have a healthier cash reserve.
Shares of Advanced holdings closed flat at 6.7 cents on Oct 14.
