Tritech to sell specialist engineering unit to meet working capital requirements

CATALIST-LISTED Tritech Group, through TGL Engineering Group, is selling Presscrete Engineering, an indirect subsidiary, to Lim Wen Heng Construction to meet its working capital requirements.

The sale price will be determined based on the total of several items, the group said in a regulatory filing on Monday just before the market opened.

The first is the audited net asset value or net liability of Presscrete for the nine months ended Dec 31, 2018. This is after accounting for the agreed value ascribed to the revalued property, plant and equipment (PPE) of Presscrete.

Appointed accounting firm Baker Tilly LLP will conduct an audit on Presscrete, and business consultant Robert Khan & Co will carry out the valuation of the PPE.

Next, Lim Wen Heng Construction will pay S$50,000 for the intangible assets of Presscrete, and also a value tied to an agreed percentage of net profits or losses after tax generated from certain agreed projects in the existing order book of Presscrete as at end 2018.

To determine this value, Presscrete will arrange for an audit of this item no later than March 15, 2021, or three months after the certificate of substantial completion (CSC) for each of the agreed projects are issued. This will ensure the final payments would not be made any later than three months after the receipt of the CSC for the projects.

The payment for all the items, along with payment of all trade and non-trade amounts due to Tritech, TGL Engineering and its associated companies, is due at the completion of the sale.

Lim Wen Heng will pay a refundable deposit of S$1.2 million upon the signing of the framework agreement. This deposit is jointly repayable by vendors Tritech and TGL in the event the sale and purchase agreement is not signed within 30 days of the payment.

The completion of the sale is conditional to the entry of the sale and purchase agreement, shareholder and regulatory approval where necessary, and that Loh Chang Kaan remains a director of Presscrete to oversee the completion of the agreed projects. (see amendment note)

Tritech said the sale would allow it to "re-strategise its financial and capital resources" for working capital requirement purposes within its specialist engineering business and/or water-related and environmental business. The group added that its board believes the sale is in the best interest of the company in regard to the terms of the sale.

Presscrete's specialist engineering services are broadly categorised into structural engineering services, ground engineering services and special construction services. The firm is a wholly owned subsidiary of TGL, which is in turn a wholly owned subsidiary of Tritech Group.

Tritech Group shares last traded at S$0.05 on Monday as at 10.45am, up 0.1 cent.

Amendment and clarification note: An earlier version of this article incorrectly said that completion of the sale is conditional to shareholder and regulatory approval when in fact approval will be sought where necessary. Tritech has on April 16 further clarified that the proposed sale does not contemplate the sale of its entire engineering business but solely the sale of Presscrete. It added that its engineering business will "continue to be a core business of the group".