OKH Global to divest holdings in two companies to repay loans

PROPERTY Developer OKH Global has entered into a conditional share sale agreement to dispose of its holdings in Equalbase and in Deltanvil for S$51.4 million.

This is more than the counter's current market capitalisation at S$28.2 million.

Equalbase is a logistics warehouse owner and developer with three logistics properties in Singapore and Malaysia; Deltanvil is a freight-forwarding provider majority-owned by Christian Paul Bischoff.

The transaction involves the company's subsidiary, OKH Transhub selling its 40-per-cent stake in Equalbase to Deltanvil. Then another OKH subsidiary, Chronoz Investment, is to sell its 15 per cent stake in Deltanvil to Bischoff.

There were attempts to sell the holdings to Deltanvil and Bischoff in 2017, but the buyers failed to complete the translation. There have been no interested third-party buyers in the meantime.

The Equalbase transaction will net OKH Global S$43.4 million; the Deltanvil transaction will net S$8 million. This would result in OKH Global divesting of its entire stakes in Equalbase and Deltanvil.

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The two transactions will result in a net loss of S$16.6 million or 24 per cent, as the book value of the Equalbase holdings was S$59 million and Deltanvil was S$9 million as of Jun 30, 2021. The completion of the transaction between Deltanvil and Paul is contingent on the transaction between OKH Transhub and Equalbase.

Equalbase is being divested because OKH Global is unable to meet the cash flow needed to fund Equalbase's expansion into new development projects. The divestment of Deltanvil comes out of tough prospects and a volatile environment; its logistics business has been trending down in the past few years, and OKH Global is not optimistic about the prospects of the sector.

OKH Holdings said: "The group also needs to improve its overall cash flow position, which would be facilitated by the sale proceeds from the proposed divestment."

The proceeds will go into repaying two secured shareholders' loans at an aggregate principal sum of S$40.5 million.

Shares in OKH Global closed down S$0.001 or 4 per cent to S$0.024.