MAINBOARD-listed Advance SCT is restructuring its holdings in its radiator business, in an attempt to unlock more value for the company and its shareholders.
Advance SCT announced on Thursday it would be buying up the remaining 50 per cent it does not already own in Everglory Cooling Systems Pte Ltd (ECS) from ECS CEO, Peter Chue, for a nominal sum of S$1.
ECS is engaged in the development and commercialisation of a high-technology copper-based heat exchanger, and it wholly owns Everglory Radiators (Shenyang) Co, Ltd (ERS), in Shenyang, China. Between ECS and ERS, they own a workshop in Singapore and a radiator manufacturing facility in China.
In addition to buying up the rest of ECS, Advance SCT will also sell its entire 100 per cent stake in dormant company Everglory Environment Pte Ltd (EEV) to Mr Chue for a nominal sum of S$1.
Mr Chue, through EEV, will lease the assets from ECS in an operations and management agreement. "The board is of the view that given the longer-than-expected run-up period to achieve profitability in the high-tech radiators, it is in the best interests of the company and its shareholders to rely on the certainty of a predetermined return on assets without the burden of operations by way of the leasing arrangement," Advance SCT's filing on Thursday said.
Given that EEV had a net tangible liability of S$16,222, as at March 31, 2016, its sale will result in a gain on disposal of S$16,223.
The purchase of ECS, which had a net tangible liability of S$493,906, as at March 31, 2016, would result in a loss on acquisition of S$246,954. However, as EEV has concurrently granted ECS a convertible bond of S$250,000 for a nominal consideration of S$1, this results in a gain of S$249,999 to the group, and the net effect of the ECS acquisition is a gain of S$3,045.
The transactions are expected to be completed by the end of August.
Advance SCT shares remain suspended.