Water treatment firm Hyflux has proposed a distribution of shares in the consumer business it is thinking of spinning off as a separate listing.
This will then allow the unit, Hyfluxshop, to consider a listing if its growth performance and market conditions allow, said the firm, which flagged the move in August.
Hyflux is planning to distribute 70 per cent of the stock in Hyfluxshop Holdings to existing shareholders, on the basis of one Hyfluxshop share for every 10 Hyflux shares held, at no cost to them.
Hyflux will retain the remaining 30 per cent stake in Hyfluxshop.
The company entered the consumer business in 2003 and expanded its products to include the Elo brand, a form of oxygen-rich water, in 2015.
Hyfluxshop has three main areas: consumer lifestyle products, including water filtration devices; Elo Water and related products and services; and Elo Green products.
Hyflux noted yesterday: "The health and wellness segment is distinctly different from Hyflux's traditional municipal and industrial segments, and separating Hyflux and Hyfluxshop also allows for valuations of both entities that are more reflective of the underlying value and growth potential of their respective businesses."
Hyfluxshop is at an early stage of growth so the share distribution means that investors will be able to ride on the potential appreciation in the value of the stock if and when the proposed listing happens, it added.
Each Hyfluxshop share has a pro forma net tangible asset value of 17.83 cents.
The dividend in specie of about 70 per cent of the total number of Hyfluxshop shares would amount to a dividend distribution of about $14 million to shareholders.
To effect the distribution, Hyflux will appropriate about $14 million out of its retained profits to meet the amount of dividend to be declared.
Hyflux said in August that its consumer business is a "high-growth" segment that can cater to the growing middle class in Asia and their health and wellness concerns.
The group's profitability has been weighed down in recent years by losses from its Tuaspring water and power plant because of a large supply overcapacity in the Singapore power market.
The group reported a net loss of $26.1 million for the three months to Sept 30 after recording a profit of $12.1 million in the same period a year earlier.
Revenue slumped 61 per cent to $98 million due to lower turnover from engineering, procurement and construction activity.
This was in line with the respective construction phases of major projects such as the TuasOne waste-to-energy project in Singapore and the Qurayyat Independent Water Project in Oman.
The proposed distribution is subject to approval from shareholders at an extraordinary general meeting expected to be convened on Feb 1.
Hyflux shares, which have lost 28 per cent this year, closed unchanged at 37 cents yesterday.