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AEI to sell business to exec directors for S$6.4m; they step down on Monday

ALUMINIUM producer AEI Corp is selling its business and liabilities to the investment vehicle of its executive directors, Ian Tan Chu En and his wife Sinta Muchtar, for S$6.4 million.

This qualifies the deal as an interested person transaction. Mr Tan, who is also AEI's chief executive officer, and Ms Muchtar, are stepping down from their respective positions in AEI, effective on Monday.

The buyer, 3PLE1 Holdings, is the investment holding vehicle of the pair and their associates, with Mr Tan also acting as the buyer's guarantor for the deal.

Mr Tan and Ms Muchtar, on top of being shareholders, are also directors of Singapore-incorporated 3PLE1 Holdings.

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"The company has been exploring investment opportunities or acquisitions of other businesses in view of the lacklustre outlook of the group’s core electronics & precision engineering segment," said AEI in an exchange filing on Monday.

"The proposed disposal is part of the group’s restructuring exercise and business transition into new businesses to enhance income streams."

AEI's subsidiary AEI Trading and Investments Pte Ltd is excluded from the deal as it will be used to explore new businesses.

The deal also excludes a property at 12 Penjuru Lane in Singapore, and bank accounts of the company that are unrelated to its aluminium business.

3PLE1 Holdings will buy AEI's aluminium business for S$4 million, plus an estimated S$2.4 million for AEI's corporate guarantee liabilities.

The total S$6.4 million amounts to 12.28 per cent of the group's latest audited net tangible assets of S$52.4 million as at Dec 31, 2018.

As this exceeds the 5 per cent threshold, the proposed deal will be subject to shareholder approval in a general meeting.

Half of the deal amount will be paid upon completion and the second half will be paid no later than six months after the deal's completion. Its long-stop date is Dec 31, 2020.

AEI will appoint an independent financial adviser (IFA) to advise its independent directors regarding the deal while the firm's audit committee wil obtain an opinion from the IFA before forming and disclosing its view.

AEI shares were up S$0.02 or 3 per cent to S$0.68 as at 10.36 am.