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INDUSTRIAL equipment supplier Hoe Leong Corporation has reached an agreement to sell its 49 per cent stake in Semua International, a major Malaysian oil tanker and transport logistics company, as the group performed below expectations.
Under the binding heads of agreement with Reachmont Logistics and Asia Bioenergy Technologies, Hoe Leong will sell its direct and indirect stakes together with the other major shareholder Sumatec Resources that holds a 49 per cent stake through a special purpose vehicle. A separate agreement to transfer the entire issued capital of the special purpose vehicle will be signed, for a total of RM168 million (S$62.3 million), to be satisfied in cash or shares in Asia Bioenergy Technologies.
The group had acquired its stake in Semua and its subsidiaries in 2010 to generate different revenue streams which are complementary to Hoe Leong's existing oil and gas supply vessel chartering business.
As the group performed below expectations, Hoe Leong now looks to free up cash to strengthen its balance sheet through the disposals, and also to settle liabilities and disputes with third parties as it waits for the settlement in the summons taken by Auspicious Journey against the company.
The transactions will also allow the group to reconfigure and consolidate its operations and resources of its vessel-chartering services, Hoe Leong said.
The transaction is expected to be completed within three months.