Jackspeed plans sale of business and assets, liabilities to CEO for S$48m

JACKSPEED Corporation is looking to sell its entire business as a going concern, as well as all its assets and liabilities to executive deputy chairman and CEO Yap Kian Peng for S$48 million in cash.

The leather trim manufacturer for car seats said on Tuesday that it has inked a conditional sale-and-purchase agreement with Mr Yap for the proposed disposal to a special-purpose vehicle to be incorporated and controlled by him.

This will be considered an interested person transaction and a major transaction, and thus requires approval of shareholders first.

Jackspeed said: "With increasing uncertainties in the global economic outlook, particularly in light of the ongoing trade war between China and the United States and heightened geopolitical tensions around the world, the directors of the company believe that the proposed disposal presents a good opportunity to unlock value for the shareholders, and that...it presents the company with an opportunity to exit the increasingly challenging business environment and immediately realise its investment in the business."

Upon completion of the proposed disposal, the company will cease to have any operating business and will be deemed a cash company.

It plans to use net proceeds to acquire new assets or businesses to satisfy listing requirements, and will announce the specific uses for the proceeds in greater detail when appropriate.

Based on the group's latest unaudited consolidated financial statements for FY19, net profit after tax attributable to Jackspeed's business and the business assets for sale is about S$5.8 million.

The book value and net tangible asset value of the business and the assets to be disposed were about S$53.2 million and S$52.7 million respectively.

The estimated loss on the proposed disposal is about S$5.4 million based on the book value of the business and the assets as at end-February 2019. Upon closing the deal, the company will take immediate steps to change its name and remove the word "Jackspeed" from its name within three months, it said.

The company has appointed CEL Impetus Corporate Finance as the independent financial adviser (IFA) to provide an opinion letter as to whether the proposed disposal, as an interested person transaction, is on normal commercial terms and is not prejudicial to the interests of the company and its minority shareholders.

The audit committee will also obtain an opinion from the IFA before forming its view on the sale. 

The proposed disposal is subject to independent shareholders' approval at an extraordinary general meeting to be convened.