GS Holdings explains S$2 sale of subsidiaries' assets

Singapore

GS Holdings has responded to queries from the Singapore Exchange (SGX) about the sale of its subsidiaries for S$2, saying that the subsidiaries' assets comprised human resource and accounting software which would be difficult to sell to different parties separately.

GS Holdings has proposed selling two cleaning and dishwashing subsidiaries - GS Cleaning Services (GCS) and GS Equipment Supply (GES) - for S$2 to a former subsidiary, GreatSolutions.

But, according to its Monday announcement, the two subsidiaries have a combined adjusted net asset value (NAV) of S$100.

SGX has, therefore, asked GS Holdings to disclose the value of the assets held by the two subsidiaries. SGX also asked whether GS Holdings's board had considered a sale of the assets of the subsidiaries instead, and if that would yield a better outcome.

In its response, GS Holdings said that GCS had property, plant and equipment (PPE) valued at S$1,065 as at May 31. This PPE amount, GS Holdings said, comprised software.

On top of this, however, GCS's assets included S$143,619 due from GreatSolutions and GES, S$160,276 in cash and S$66,071 in receivables and amounts due.

GES, meanwhile, had S$8,645 in intangible assets comprising software. But it also had S$11,767 in inventories, S$72,604 due from GreatSolutions, S$2,855 in receivables and S$9,986 in cash.

GS Holdings also said there were no discussions with other potential buyers for its cleaning and dishwashing subsidiaries.

GreatSolutions, now owned by businessman Tay Joo Heng, had approached GS Holdings to buy GCS and GES. GS Holdings said it felt the disposal of the two subsidiaries would be in its best interests.

SGX also asked why shareholder approval had not been sought for the disposal.

GS Holdings said that the shareholder approval sought for the GreatSolutions disposal last year, along with the approval for a proposed diversification into branding, operation and procurement, meant that the cleaning and dishwashing business would no longer be a business segment of the group.

Before its disposal, GreatSolutions was the main operating subsidiary of GS Holdings's cleaning and dishwashing business.

GreatSolutions currently provides services to two food courts under Hao Kou Wei - a company GS Holdings acquired in 2019 which is in the business of letting and operating food courts, coffee shops and eating houses.

The proposed sale of GCS and GES was not aggregated with GreatSolutions because GS Holdings wished to retain GCS and GES and assess if its food and beverage (F&B) business would require their services, the statement added.

GS Holdings shares closed at S$0.48 on Wednesday, down two cents or 4 per cent.