Enviro-Hub acquires remaining 75% stake in Pastel Gloves

ENVIRO-HUB Holdings is acquiring the remaining 75 per cent stake in its associate company Pastel Gloves Sdn Bhd (PGSB) for S$46.8 million in a 50-50 cash and share transaction. With this, PGSB will become a fully-owned subsidiary of Enviro-Hub.

Under the terms of the deal, Enviro-Hub will pay a cash consideration of S$23.4 million and issue 292.5 million new shares at a pre-determined price of S$0.08 apiece, which amounts to a total value of S$23.4 million.

For the cash consideration, 25 per cent or S$5.85 million of the amount will be paid upon completion of the deal. The remaining S$17.55 million will be paid on a staggered basis upon PGSB's achievement of performance guarantee of US$18 million in aggregate over the period of fiscal years 2021 to 2023.

There will also be a one-year moratorium for all the shares issued.

For the second half of the fiscal year 2020 ended December last year, Enviro-Hub posted a net profit of  S$597,000, some 39 per cent lower than a profit of S$976,000 in the year-ago period. 

For the full FY2020, Enviro-Hub chalked up losses of S$990,000, reversing from net profit of S$298,000 in FY2019. 

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Post-acquisition, the founders of PGSB, Law Siau Woei and Choo Kuan Ping, will remain at the helm. The duo have over 20 years of experience in the gloves manufacturing industry, and were involved in the glove-supply business as traders before setting up the Malaysia-based PGSB.

When the transaction is completed, Mr Law will be a substantial shareholder in Enviro-Hub. The group said this will align his interests strongly with other shareholders of Enviro-Hub.

Raymond Ng, executive chairman of Enviro-Hub, said that the deal would give the group "absolute control of the lucrative glove operation" of PGSB, which will generate both a strong bottom-line and positive cash flow for the company. This cash flow will also help the company to expand its new healthcare product business line, he added.

"The management team from PGSB is experienced in the personal protective equipment (PPE) business and is committed to growing the healthcare product business division in Enviro-Hub, rather than just focusing on PGSB."

In February, PGSB installed and commissioned its first automated glove-dipping line, the output and expected production capacity of which is 132 million pieces of gloves per annum.

Under its expansion plans, the company is aiming to build a total of six production lines by September. The combined expected annual production capacity for the six glove-dipping production lines is 1.42 billion pieces of gloves.

Enviro-Hub acquired its initial 25 per cent stake in PGSB in January 2021. Enviro-Hub's shares last traded at 8.5 Singapore cents on Tuesday. The company had called for a trading halt before the market open on Wednesday, pending the release of an announcement, and lifted the trading halt after market close on Friday.