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JES International Holdings plans to sell its shipbuilding business to Hong Kong Victo International for an initial US$500,000 in cash and a potential top-up after a year.
JES, a shipbuilding and offshore engineering company, will sell all of its Jiangsu Eastern Heavy Industry Co and Jiangsu New Eastern Marine Engineering Equipment Co subsidiaries, and 49 per cent of Jiangsu Nereus Shipyard Co in the deal.
The disposal companies had a fixed asset value of 1.53 billion yuan (S$324,2 million) as at Dec 31, 2014, and bank debts of about 1.96 billion yuan. They also had trade payables of 558.46 million yuan at that time.
If the fixed asset value of the disposal companies is more than US$1 million over their combined bank debt and trade payables one year after completion, Hong Kong Victo will pay JES an additional amount equal to one-fifth of the net value of the disposal companies at that time.
The company has been in discussions with potential investors to either invest in or bring business to JES, but the insolvency of the shipbuilding business has been hindering progress, JES said in a Singapore Exchange announcement. Selling those assets will allow the company to dispose of their liabilities and to seek new business.