GKE Corp plans to sell stake in warehousing firm for 58.5m yuan

INTEGRATED warehousing and logistics solutions provider GKE Corp has proposed to sell its 65 per cent shareholding in loss-making Van Der Horst Logistics (VDHL) for 58.5 million yuan (S$11.7 million) in cash.

Catalist-listed GKE on Wednesday signed a legally binding memorandum of understanding (MOU) with the buyer, Hung King Holdings, which also holds the remaining 35 per cent stake.

Both parties agreed to negotiate in good faith to enter into a definitive agreement within six months from the date of the MOU, failing which the MOU will be null and void.

VDHL has a wholly-owned subsidiary, VDH Shanghai, which provides warehousing services in China.

In a bourse filing on Wednesday night, GKE said it wants to sell the shares because the group no longer needs to use VDHL's and VDH Shanghai's warehousing services, and in view that VDHL is loss making.

Besides, the divestment will enable GKE to focus on its other businesses, it said.

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GKE expects to recognise a net gain before tax of about S$1.5 million from the proposed sale, and intends to use the sale consideration to finance its working capital requirements.

The sale price of 58.5 million yuan was determined after taking into account VDHL's revenues, loss-making position and net tangible asset value, as well as the total amounts it owes to the GKE group as shareholder loans.

GKE shares finished Wednesday at 7.8 Singapore cents, up 0.2 cent or 2.6 per cent, before the announcement.