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Hong Leong Asia unit to wind up after disposal of assets

MAINBOARD-listed Hong Leong Asia's subsidiary, Airwell Air-Conditioning Technology, will be disposing assets for a total cash consideration of 141 million yuan (S$28.3 million) and will wind up and dissolve following the disposal.

Airwell Air-Conditioning has entered into a sale and purchase agreement with Taicang Loucheng High-tech Group to sell a property in China, including its land use rights, home ownership rights and the facilities and assets.

The property located at 82 Guangzhou East Road, Taicang, China has a remaining leasehold tenure of approximately 41 years and an aggregate gross floor area of approximately 149,293.3 sq m for industrial use, said Hong Leong Asia in a bourse filing on Wednesday.

The sale comes as Airwell Air-Conditioning has been loss-making since 2012, with its performance further impacted by the stiff competition in the air-conditioning systems market in China, said Hong Leong Asia.

In the last two years, the net losses stood at around S$11 million and S$17.1 million, respectively for the years ended Dec 31, 2018 and Dec 31, 2019.

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Based on the net book value of the underlying assets of 111.3 million yuan, the disposal is expected to result in a net gain on disposal of approximately 14 million yuan, after taking into account legal fees, taxes and other relevant transaction costs. Proceeds will be used to settle the financial obligations of Airwell Air-Conditioning.

Following completion of the disposal, Hong Leong Asia intends to take steps to wind up and dissolve Airwell Air-Conditioning. The disposal of assets and eventual winding up and dissolution of the Airwell Air-Conditioning are expected to have positive effects on the financial performance of the group going forward, said Hong Leong Asia.

Share of Hong Leong Asia closed at 45.5 Singapore cents on Wednesday, down 1.5 Singapore cents or 3.2 per cent.

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