Pacific Star sheds aluminium business to focus on property

Singapore

PACIFIC Star Development is liquidating its aluminium business division as it looks to focus on property development.

The move will see a creditors' voluntary liquidation of its subsidiaries Durabeau Industries (DIPL) and LH Aluminium Industries (LHPL) - both of which collectively make up its aluminium business division.

Both companies have issued the required notices to their respective creditors for meetings taking place on May 30.

In a statement on Wednesday, Pacific Star said the aluminium division accounts for a "relatively small and insignificant" proportion of the overall revenue for the group. It has been facing strong industry competition, with challenges in achieving profitability in the long run, Pacific Star said.

Discontinuing the aluminium business would allow it to free up resources, management time and attention to further support its property development business, the company noted.

According to its annual report, the aluminium division contributed S$3.9 million to the company's total revenue of S$121.4 million for the financial year ended June 30, 2018. Meanwhile, the group's property division contributed S$117.4 million in total revenue in the same period.

The liquidation follows a failed disposal attempt earlier this month, which saw the termination of a sales-and-purchase agreement with purchasers Tu Li Ming and Shen Yimin, business owners engaging in construction work in Singapore.

The agreement was terminated on the basis of allegations that Pacific Star had breached a condition, which it is disputing. After discussions to revise the terms for a new agreement, Pacific Star decided to continue with the termination after rejecting the purchasers' proposed revised terms.

The talks had revolved around DIPL and LHPL being sold for S$2, which took into account their net asset value, inter-company loans and obligations between them, the group and the group's subsidiary PSD Singapore. The discussions also considered future capital requirements to fund the operations of DIPL and LHPL to carry out current and future construction contracts.

DIPL and LHPL are primarily contractors for various property development projects in Singapore. They also design, fabricate and install aluminium products such as window grilles and doors.

Shares in Pacific Star closed at 12.3 Singapore cents on Thursday, up 0.1 cent or 0.82 per cent.