Tye Soon Limited intends to sell its properties at Waterloo Centre to ValueMax Properties, a wholly-owned subsidiary of mainboard-listed ValueMax Group for S$11 million.
On Tuesday, Tye Soon and ValueMax Properties entered into a put and call option agreement to sell and purchase 11 units at Block 261 Waterloo Street, which have a total floor area of 708 square metres and are currently used as a retail outlet and storage facility for automotive parts. They are leasehold properties, with an 83-year lease from the Housing and Development Board that started on July 1, 1994.
Tye Soon said that the sale consideration is about 34 per cent of the company's market capitalisation on March 16. The proposed disposal is thus expected to have a positive impact on shareholder value.
After the sale, the company will relocate its automotive parts retail operation at Waterloo Centre to an area outside the central business district, closer to automotive repair workshops.
Based on the properties' net book value of S$3 million as at Dec 31, 2014, Tye Soon expects a net gain of S$7.9 million, after deducting expenses of about S$0.1 million.
Proceeds from the sale will be used as general working capital and to reduce bank borrowings. There may also be a distribution by way of dividend to the company's shareholders, the group said.
Tye Soon's shares closed 0.9 cent up at 13.2 cents each, before the proposed disposal was announced.