Union Gas may buy LPG businesses from parent Union Energy
Annabeth Leow
Singapore
LIQUEFIED petroleum gas (LPG) dealer Union Gas Holdings plans to buy LPG distribution, bottling and storage businesses from substantial shareholder Union Energy Corp, the board has disclosed in a bourse filing.
Catalist-listed Union Gas inked an exclusive, non-binding memorandum of understanding on Wednesday with Union Energy Corp, its sole supplier of bottled LPG cylinders.
The deal is expected to be funded by a mix of cash and shares, with the possibility of tapping bank borrowings or a fund-raising exercise.
It would count as an interested-person transaction and depends on fulfilling conditions such as an independent valuation of the assets.
The Union Gas board billed the potential purchase of Sembas (Asia) Trading, Semgas Supply and Summit Gas Systems as "strategic and complementary to its existing business".
The transaction would likely improve Union Gas's business performance and financial results, as well as raise its scale, operational efficiencies and resilience, said the board.
It noted that the new businesses might let Union Gas expand into wholesale distribution of bottled LPG cylinders, or the bottling and refilling of LPG cylinders to other entities. The company could also build its commercial and industrial customer base and beef up its supply chain, it added.
Besides the potential vendor's stake in Union Gas, Union Gas chairman Teo Kiang Ang, chief executive Teo Hark Piang and substantial shareholder Ellen Teo also hold substantial stakes in Union Energy Corp.
As it would be an interested-party transaction, shareholders would have to approve any potential purchase at an extraordinary general meeting.
But shareholders and potential investors were advised to exercise caution when trading in Union Gas shares, as a definitive sale-and-purchase agreement may not materialise.
"The company will provide relevant update announcements as and when there are material developments," the board said in its filing.
Shares closed flat at S$0.265 on Wednesday, before the latest news.
