World Precision Machinery proposes to sell 3 China factories to director's unit

A WHOLLY-OWNED subsidiary of mainboard-listed World Precision Machinery (WPM) has signed a memorandum of understanding (MOU) to sell three Shenyang factory buildings and their associated land to a unit owned by a director, the company said in a bourse filing on Monday.

The MOU is between the subsidiary, World Precise Machinery (Shenyang), and World Agriculture (Shenyang), a wholly-owned subsidiary of Jiangsu World Agriculture Machinery.

Under the terms of the MOU, World Precise Machinery (Shenyang) will incorporate a subsidiary whose sole business and assets are to hold the proposed sale property.

All shares in the subsidiary will be sold to World Agriculture (Shenyang), which will also appoint an independent professional valuer to value the property, and use its valuation to form the basis of the value of the sale shares.

No sale price has been agreed upon yet. If the companies are unable to agree on a sale price within six months from April 17, the MOU will be terminated immediately, unless both sides agree to extend the term of the MOU for a further six months.

WPM must obtain shareholders' approval for the proposed sale, as director Wang Weiyao has a 73.62 per cent stake in Jiangsu World.

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WPM said the terms and conditions of the MOU were negotiated and agreed upon on an arm's length basis.

The land and buildings, located in China's Shenyang Economic and Technological Development Zone, form a total area of approximately 255,760.32 square metres.

The net book value of the properties was 209.36 million yuan (S$42 million) as at Dec 31, 2019. This represents approximately 20 per cent of WPM's net tangible assets, based on the group's latest audited financial statements ended Dec 31, 2018, it said.

WPM said the proposed sale is beneficial for the group as the factory buildings are in excess of its business requirements.

WPM shares were trading flat at S$0.17 as at 9.57am on Monday after the announcement.