Acesian Partners to sell loss-making unit for S$321,000

CATALIST-LISTED environment-control exhaust systems provider Acesian Partners has inked a sale and purchase agreement for its Acesian Sun unit, following a memorandum of understanding on Feb 1.

Under the deal with Singapore-based public transport consultancy Metro Transit Solutions, signed on Monday, Acesian Sun will be sold off for S$321,000 in cash - most of it spread out over monthly instalments.

The board of Acesian Partners, which has been under judicial management since January 2017, said it believes that "it will be more prudent" to divest from the loss-making Acesian Sun to focus on the group's core business and, hopefully, improve overall financial performance.

Acesian Partners expects net proceeds of about S$315,000 from the transaction, which it plans to use for general working capital requirements. It pegged the net gain from the sale at roughly S$277,000, after taking into account the waiver of some S$322,000 in inter-company debts owed by Acesian Sun.

The 12 monthly instalments cover S$231,000 in payments. Any of the last eight instalments can be waived if unpaid, if a certain maintenance services contract is scrapped within a year of the agreement, unless Acesian Sun or Metro Transit Solutions is at fault for the termination, said Acesian Partners.

Acesian Sun, which was set up in 2016, carried out maintenance and repair for air conditioning, ventilation, and electrical systems. It had an unaudited net asset value of about S$38,000 and net losses of more than S$351,000 as at Dec 31, 2018. No fresh valuation was done for the disposal.

The price tag for the transaction, which was reached on a willing buyer, willing seller basis, took into account Acesian Sun's net liability and loss-making position, said the Acesian Partners board.

The board noted that Acesian Sun had "limited" growth prospects - based on its lack of a licence to tender for large-scale government projects and its lack of a foreign manpower quota - and added that the parent company's status under judicial management has significantly strained its ability to obtain financing from suppliers and renew and win contracts.

Assuming that the deal had gone through on Jan 1, 2018, Acesian Partners would have seen its full-year earnings per share rise from 0.36 Singapore cent to 0.43 Singapore cent, the board said, presenting the pro forma financial effects of the transaction.