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Metal Component can sell dormant Chinese unit without shareholder vote

PLANS by Catalist-listed metal stamping company Metal Component Engineering (MCE) to sell a dormant Chinese subsidiary will not need shareholder approval, after the company got a waiver from the bourse operator, according to a filing by the board on Thursday.

MCE had in November unveiled a non-binding agreement to sell MCE Industries (Shanghai) to businessman Pan Genfu for 75.5 million yuan (S$14.6 million), later seeking a waiver from the requirement to get shareholders' approval for the deal in an extraordinary general meeting (EGM).

In its latest update, the board disclosed that Mr Pan has not yet completed due diligence of MCE Industries, and no definitive agreement has been inked for the planned sale.

As for the EGM waiver, MCE told the Singapore Exchange that MCE Industries, which fell dormant in 2017 after the closure of a manufacturing plant, is a non-core asset.

It noted that the planned sale was not expected to materially change MCE's risk profile, since there would not be any significant impact on the group's operations and business or significant hit to earnings, working capital and gearing.

MCE has projected a gain of about S$8.43 million on the sale, with the price tag at a premium to the fair value of the leasehold property in Shanghai's Qingpu district that is now owned by the Chinese subsidiary. Also, the deal is an arm's-length transaction, the board added.

MCE shares closed at 2.9 Singapore cents on Thursday, up 0.1 Singapore cent or 3.57 per cent, on a volume of 14.3 million shares, before the announcement.