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USP Group to sell biofuel unit in S$6m deal

USP Group plans to sell its biofuel unit to raise cash and focus on its marine business, the loss-making company announced on Wednesday evening.

USP will see Biofuel Research, a 93.09 per cent-owned waste oil-to-biofuel subsidiary, for S$5.59 million to a joint venture between the founders of AJ Jetting Pte Ltd and Shanaya Environmental Services Pte Ltd, under a non-binding term sheet.

Both parties have agreed to have a definitive sales and purchase agreement by March 30, although USP will need its shareholders to approve the transaction at an extraordinary general meeting.

Mainboard-listed USP said in its announcement that the deal will let it strengthen its financial position and improve its cash position. It had most recently reported a net loss of S$380,000 for the third quarter to Dec 31, 2018, with revenue growth partly offset by lower contributions from the waste oil business.

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Chief executive Kan Bright Pan added in a statement: "After carefully analysing the business and its contribution to the group, the board has decided to sell Biofuel Research, as it is attractively priced, so that we can concentrate more on our marine business.

"In view of this, the group will explore new markets and opportunities, investing in (research and development) for other marine products to increase the product range."

USP also said that it will do its best to secure the sale of the remaining stake in Biofuel Research at the same price to the potential buyer, which has expressed interest in full ownership.