IN a move to streamline its businesses, Koh Brothers Group is injecting its construction arm Koh Brothers Building & Civil Engineering (Pte) Ltd (KBCE) into its listed subsidiary, Koh Brothers Eco Engineering (KB Eco), for S$19 million.
Post-restructuring, Koh Brothers Group will focus on property development, building materials as well as leisure and hospitality businesses with plans to expand regionally, while enlarged KB Eco will become a one-stop engineering solutions company with greater cost efficiencies from shared overheads with KBCE.
Being part of KB Eco, KBCE will be able to raise funds more easily as it guns for potential merger and acquisition (M&A) targets, said Koh Brothers Group managing director and group CEO Francis Koh. He is also non-executive chairman of KB Eco.
As the payment by KB Eco to the group will be made via issuance of 369.15 million new shares, this will shore up the group's stake in KB Eco from the current 41 per cent to 70.1-72.3 per cent, depending on whether the outstanding warrants held by Koh Brothers Group and an unrelated third-party Lee Thiam Seng under 2012 subscription agreements will be exercised.
Both shares of Koh Brothers Group and KB Eco were halted since Wednesday morning pending the announcement released on Thursday after the market close.
With the restructuring, the enlarged KB Eco will have its niche sharpened in the hydro-engineering sector and the challenging construction sector both locally and regionally, Mr Koh said.