Serial System to sell stake in laundry business

Singapore

SERIAL System will sell its stake in Australian laundry business SPL Holdings (Australia) Pty Ltd for US$31.2 million, the electronic components distributor said on Wednesday.

Serial System said it expects to recognise a gain of US$20 million from the sale of its entire 27.34 per cent stake in SPL, representing a premium of 179 per cent over the company's book value in SPL as at June 30, 2018.

The company will use about 40 per cent of the proceeds to repay bank loans and also plans to pay a special dividend to shareholders. The rest of the proceeds will be for working capital to support its main distribution business and for future investments.

Serial System first invested in SPL in 2014, taking a 20 per cent stake, then increased its investment in 2016. Its entire stake will be sold to Anchorage Bridge Street Pty Ltd, a company owned by funds managed by Australia-based private equity firm Anchorage Capital Partners.

On a pro forma basis, had the sale been completed in 2017, the group's earnings per share would have risen to 3.31 US cents from 1.07 US cents, while net tangible assets would have increased to 16.04 US cents a share from 13.81 US cents.

Said Serial System executive chairman and chief executive officer Derek Goh: "We have been invested in SPL for more than four years now. This deal with Anchorage Bridge Street is timely and particularly rewarding as the returns are extremely attractive.

"The sales proceeds will come in handy for our main distribution business and for strengthening our balance sheet," he added.

On a pro forma basis, the sale would have taken the firm's net gearing down to 82 per cent from 115 per cent.

Serial System shares closed up 1.3 Singapore cent or 9.6 per cent at 14.9 Singapore cents on Wednesday.