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Tritech snags new investors for loss-making China unit in 42.3m yuan deal

CATALIST-LISTED Tritech Group will bring on new investors in a key water treatment unit for 42.3 million yuan (S$8.39 million) in cash, in a deal inked on Thursday and disclosed the next night.

Tritech is selling wholly-owned Tritech Environmental arm, as well as four China-based subsidiaries, to a pair of third parties: state-owned Qingdao Ocean Group, which will take a 40 per cent stake, and construction group Rongtai Construction, which will own 20 per cent.

"The proceeds from the proposed disposal represent an unlocking of the investment that the company had put into the water and environmental business and will improve the financial position of the group," Tritech said in its bourse filing.

The price tag for the loss-making Tritech Environmental involves a discount of nearly S$855,000 to its book value, according to Tritech. On a pro forma basis, the sale, if done earlier, would have trimmed Tritech's loss per share for FY2019 from 3.01 Singapore cents to 2.82 Singapore cents.

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The plan is for the three shareholders to turn Tritech Environmental into "a leading water treatment player in China within the next three to five years", which Tritech said would be helped by Tritech Environmental's ability, as a subsidiary of a state-owned enterprise, to tender for certain large-scale governmental projects in China and to access more financing options.

Meanwhile, Tritech will take over two units now under Tritech Environmental - Tritech Water Technologies and Tritech SysEng Pte Ltd. It said that the corporate rejig would let the group focus on supplying membrane-related products and water-quality monitoring services in Singapore and the region, which it said would be a "less capital-intensive" line of business.

The deal, which involves some conditions precedent, is expected to be done by July 31.

Tritech, which called a trading halt on Thursday, last closed at S$0.03.