TTJ Holdings unit acquires industrial building and machinery for wood pellet business

TTJ Holdings' subsidiary, TTJ Greenfuel, on Wednesday entered into an agreement to acquire an industrial property in Singapore and machinery for S$16.18 million.

TTJ, the listed parent company, said after Wednesday's trading close that this asset acquisition from Biofuel Industries will go towards building a wood pellet manufacturing busness.

The property at 51 Shipyard Crescent occupies a total land area of 20,000 square metres. The lease on the property with JTC Corp expires in December 2034.

The property is now used mainly as a wood recycling plant to convert wood waste into wood chips. An independent third party valuer, Premas Valuers & Property Consultants, valued the property at S$15.5 million. 

TTJ intends to upgrade and enhance the existing production line for the purpose of converting wood waste into wood pellets instead.

It is eyeing increasing demand for wood pellets from Asia's largest consumers, Japan and South Korea. 

"New biomass-consuming power plants are scheduled to become live in Japan and South Korea by 2020, which will further increase demand for wood pellets," it said.

The proposed asset sale and purchase is conditional on, among other things, approval from TTJ's board and the board of Biofuel Industries.

The long-stop date for the deal is Feb 28, 2019.

TTJ said that it intends to fund the acquisition by internal resources and bank borrowings.

TTJ closed at 29 Singapore cents on Wednesday, up 0.5 Singapore cent.