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Pan Asian Holdings unit sells remaining 25% stake in Tianjin firm for 3.1m yuan
PAN Asian Holdings said its unit has disposed a remaining 25 per cent stake in DWK Valves (Tianjin) Co (DWKTJ) to purchaser Qi Yao Zhong for 3.1 million yuan (S$625,000).
The purchase amount will be paid over three years from the date of completion and was arrived at based on 25 per cent of DWKTJ’s paid up capital of 12.5 million yuan.
At a discount rate of 5 per cent, which is an estimation of the group’s cost of borrowing, and assuming the net proceeds are realised equally over three years, the net present value of the sale is S$567,343.
The sale and purchase agreement (SPA) entered between the parties was approved by China’s authority on Monday, Pan Asian said in a regulatory filing. According to the group, Mr Qi is an independent third party unrelated to any of the directors and controlling shareholders.
If purchaser Mr Qi fails to fulfil obligations regarding the purchase price in the SPA, the group can terminate the agreement and demand for 10 per cent of the sale price or S$62,500 as compensation.
Alternatively, the group may continue with the SPA and impose a daily late interest charge of 0.03 per cent of the purchase price from the overdue date commencing from June 26.
The group had, via its unit Duvalco Valves & Fittings (DVF), earlier in 2010 taken a 60 per cent stake in DWKTJ, with two other minority shareholders holding 40 per cent.
The main purpose of DWKTJ was to manufacture the Duvalco brand of valves, a core product which contributes materially to the group’s revenue. As a result of shifting its manufacturing base from Tianjin to Wuxi in 2014, the group reduced its reliance on DWKTJ. Pan Asian later reduced its stake in DWKTJ to 25 per cent in 2017.
"The board has assessed it is no longer necessary to maintain a stake in DWKTJ, hence the decision to dispose of DWKTJ," it added.
Pan Asian shares were trading at 2.1 Singapore cents on Tuesday as at 12.12pm, up 0.5 cent or 31 per cent.