Sembcorp Industries to divest stake in joint venture for 150 million yuan

SEMBCORP Industries is divesting its entire 32 per cent stake in joint venture company Shenzhen Chiwan Sembawang Engineering Co (CSE) to Chixiao Enterprise Co, for a gross consideration of 150 million yuan (S$29.4 million), it said on Tuesday.

The transaction is expected to be completed by the end of the year, subject to certain conditions precedent, including the regulatory approval of the local Administration for Market Regulation.

The consideration, net of taxes, will be received in cash upon completion of the sale.

The divestment of this non-core asset is in line with Sembcorp's capital recycling efforts, the group said.

CSE is in the business of fabrication and sale of offshore engineering, onshore industrial and structural engineering steel structure products. The company operates under a 30-year business licence which expires in July 2024.

The group said: "The consideration for the sale took into account the uncertainty of the marine industry outlook and the limited remaining operating period before the business licence expires."

Sembcorp's carrying value of this investment was S$27 million as at June 30, 2020.

A S$30 million impairment charge on the investment was taken in the group's financial results for the half year ended June 30, 2020.

Sembcorp Industries shares fell one Singapore cent or 0.53 per cent to S$1.86 on Tuesday.