SINGAPORE - Mainboard-listed Hyflux is distributing shares of its consumer business with an eye to eventually list the unit.
The water treatment company is planning to distribute 70 per cent of the shares in Hyfluxshop Holdings to Hyflux's existing shareholders on the basis of one Hyfluxshop share for every 10 Hyflux shares held. Hyflux will retain the remaining 30 per cent stake in Hyfluxshop.
With the share distribution, "Hyfluxshop is expected to be in a position to consider listing on a recognised stock exchange, should future growth performance be on track and market conditions of the capital markets be favourable", the company said.
It added that the proposed distribution will enable existing shareholders to have direct shareholdings in two distinct entities, at no additional cost.
Headquartered in Singapore, Hyfluxshop is the consumer arm of Hyflux, focusing on the health and wellness segment. This segment is vastly different from Hyflux's traditional industrial segment, and separating them allows for the valuation of both entities that are reflective of the "underlying value and growth potential of their respective businesses", Hyflux said.
Hyflux added that separating both entities will enable the management of both groups to focus on their respective core businesses, and oversee their strategies and operations more effectively.
As Hyfluxshop is at an early stage of growth, the distribution will also enable shareholders to enjoy the potential appreciation in value if and when the proposed listing happens, the company said. The pro forma net trangible assets value of each Hyfluxshop share is about 17.83 Singapore cents.
Based on the pro forma consolidated net tangible assets of the Hyfluxshop Group of about S$20 million as at Sept 30, the distribution will amount to a S$14 million payout to Hyflux shareholders. This will be taken from the company's retained profits, Hyflux said.
The proposed distribution is subject to approval from shareholders at an extraordinary meeting (EGM) to be convened on Feb 1, with the book closure date set for 5pm on Feb 7, 2018.