GS Holdings proposes to dispose of cleaning and dishwashing business

CATALIST-LISTED GS Holdings has entered into a conditional sale and purchase agreement with GreatSolutions - a former wholly-owned subsidiary - for the disposal of the entire share capital of GS Cleaning Services and GS Equipment Supply.

The proposed disposal is in line with the group's plan to complete its divestment in the centralised commercial dishwashing and cleaning business.

The disposal of GreatSolutions, which was completed on Jan 14, was part of the initial steps, according to a regulatory updated on Monday.

GreatSolutions is currently wholly-owned by GSG Capital, which is wholly-owned by businessman Tay Joo Heng, an acquaintance of Pang Pok, GS Holdings executive director and chief executive.

The proposed disposal will facilitate and ease the group's foray into the food and beverage business as well as the business of branding, operation and procurement. It will also allow the group to focus on managing and expanding these businesses.

The group said its expansion into these segments have shown promising results over the course of fiscal 2019, despite being a new entrant in those markets.

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The cleaning and dishwashing business has primarily been non-profitable since 2016, according to the filing.

GS Cleaning Services provides general cleaning services and manufactures kitchen and household utensils. As at May 31, the net liability value of GS Cleaning Services is S$852,000.

Meanwhile, GS Equipment Supply sells and rents out dishwashing and other equipment and machinery. The net liability value of the company is S$85,000 as at May 31.

The total consideration payable by GreatSolutions is S$2 in cash, which took into consideration the adjusted net asset value (NAV) of the targets - about S$100 as at May 31.

The adjusted NAV was arrived at after taking into account the aggregate net liability value of S$937,000 for the two firms; a waiver by GS Holdings of all amounts owed by them - which amounts to about S$900,500; as well as the exclusion of non-cash items and non-payment liabilities.

The group will recognise a loss of about S$98 from the proposed transaction. The inter-company debts waiver will be eliminated at the group level, and hence will not have any financial impact on GS Holdings.

GS Holdings said the proposed disposal is not expected to have any material impact on its consolidated net tangible assets per share and consolidated earnings per share for the current financial year ending Dec 31, 2020.

GS Holdings shares ended at S$0.50 on Monday, up S$0.01 or 2 per cent.