SINGAPORE - Mechanical and electrical engineering firm Libra Group plans to sell its 51 per cent stake in Malaysian travel agency YC Capital Consolidated Sdn Bhd (YCC) back to Libra's CEO and executive chairman Chu Sau Ben, for $12 million in cash.
The amount for the proposed disposal was what Libra had paid Mr Chu, who is also a controlling shareholder of the company, when it acquired YCC from him in March last year.
If undertaken and completed, the proposed disposal is expected to constitute an interested person transaction as well as a major transaction under Catalist rules. Therefore, it will be subject to shareholders' approval via an ordinary resolution at an extraordinary general meeting.
The Catalist-listed group on Monday entered into a memorandum of understanding (MOU) with YCC and Mr Chu. The company said in a filing on Monday night that the MOU is not intended to be legally binding between the parties, except for certain provisions relating to, among other things, the payment of a deposit.
Libra has received partial payment of a non-refundable cash deposit of $2.5 million from Mr Chu upon the signing of the MOU. The deposit will be offset against the $12 million cash payable by Mr Chu to Libra on the completion date of the definitive sale and purchase agreement.
YCC was acquired by Libra on March 28, 2018, as part of the latter's plans to expand its leisure and corporate travel business in Asia, which includes making arrangements for air tickets and accommodation, and advising on leisure travel packages.
However, the factors underpinning the acquisition of YCC "have shifted since the departure of YCC's senior management team in October 2018", the group's directors said in the filing.
Libra on Monday also applied for a 30-day extension to hold its annual general meeting on or before May 30 - instead of April 30 - for the financial year ended Dec 31, 2018.
The group said it requires additional time to prepare the financial statements and is unable to lay its financial statements by April 30, partly due to the proposed disposal of YCC.