Keong Hong unit to sell stake in Katong Holdings for S$34.5 million

KEONG Hong Construction, a wholly owned subsidiary of Keong Hong Holdings, entered a non-binding agreement with private company MCSK for the proposed disposal of 20 per cent of the issued and paid-up share capital of Katong Holdings on Nov 8.

This entails 200,000 ordinary shares of Katong Holdings, with the consideration for the disposal set at S$34.5 million.

On Dec 3, both Keong Hong Construction and MCSK entered a further agreement to arrange a definitive sale-and-purchase agreement regarding the proposed disposal.

The construction player estimates that the total net proceeds from the divestment will be approximately S$34.3 million, after deducting estimated expenses of approximately S$200,000.

The consideration represents a net deficit of S$15.1 million over the aggregate book value.

The net comprehensive loss attributable to the sale shares and the sale loans is also S$15.1 million, due to the loss on de-recognition of financial assets at fair value through other comprehensive income for sale shares of S$29.8 million, offset by the gain on disposal of financial assets at fair value through profit or loss for the sale loans of S$14.7 million.

Accordingly, the loss on disposal will be S$15.1 million. 

The group intends to utilise the net proceeds from the divestment for its working capital requirements and potential business opportunity.

The company’s market capitalisation is around S$18.8 million, as at the full market day preceding the date of the agreement to purchase.

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Katong Holdings is a Singapore-incorporated company primarily engaged in the business of property and hotel ownership and development. It was incorporated on Feb 13, 2014.

Keong Hong made a request to lift its trading halt at 11.07 am on Tuesday (Dec 10). Its shares last changed hands at S$0.095 on Dec 4.