IEV enters lease and sale agreement of biomass plant in Vietnam for 34b dong

IEV Holdings Limited on Thursday revealed that its indirect subsidiary in Vietnam entered into a lease and sale agreement on Monday with BSB Investment and Development for IEV's MK-1 Biomass Plant and its related assets for up to 33.995 billion dong (S$2.01 million).

The 5.995 billion dong two-year lease agreement between the IEV Vietnam Limited Liability Company (IEV Vietnam) and BSB will commence on Jan 15.

Following the expiry of the lease, IEV Vietnam has committed to transfer all use rights and ownership of the MK-1 Plant to BSB for 28 billion dong, in an agreement to be signed by June 2019, the company said in a filing with the Singapore Exchange after the market closed.

IEV also cited the low level of briquette production due to the high price of rice husks arising from poor rice production in the Mekong Delta throughout 2017 as a reason behind the lease and eventual sale of the MK-1 Plant to BSB.

With the agreement, IEV will exit from the rice-husk biomass business in Vietnam and refocus on its core engineering business, it added.

The MK-1 Biomass plant sits on a 30-year leasehold plot with a land area of 13,355 sq m in the Tan Loc Ward, Thot Not District in Vietnam's Can Tho City.

The lease and sale will be satisfied entirely by cash with the total proceeds to be used for working capital purposes of IEV.

IEV shares closed S$0.006 or 10.0 per cent lower at S$0.054 on Thursday.