SINGAPORE - Pacific Star Development said on Wednesday night (May 22) that it is liquidating its aluminium business division, as the group looks to focus on property development.
The move will see a creditors' voluntary liquidation of its subsidiaries Durabeau Industries (DIPL) and LH Aluminium Industries (LHPL) - which collectively make up its aluminium business division.
As at Wednesday, both companies have issued the required notices to their respective creditors for meetings taking place on May 30.
Pacific Star Development said the aluminium division accounts for a "relative small and insignificant" proportion of the overall revenue for the group. It has been facing strong industry competition, with challenges in achieving profitability in the long run, the group said.
As the group views its focus should be on property development, discontinuing the aluminium business would allow it to free up resources and management time and attention to further support its property development business.
The announcement follows a failed disposal attempt earlier this month, which saw the termination of a sales and purchase agreement with purchasers Tu Li Ming and Shen Yimin, who are business owners engaging in construction work in Singapore.
The agreement was terminated on the basis of allegations that Pacific Star Development had breached a condition, which it is disputing. After discussions to revise the terms for a new agreement, Pacific Star Development decided to continue with the termination after rejecting the purchasers' proposed revised terms.
DIPL and LHPL were in talks to be acquired for $2, a sum which was decided on considering their net asset value, inter-company loans and obligations between them, the group, and the group's subsidiary PSD Singapore. It also considered future capital requirements to fund the operations of DIPL and LHPL to carry out current and future construction contracts.
DIPL and LHPL are primarily contractors for various property development projects in Singapore. They also design, fabricate and install aluminium products such as window grilles and doors.
Shares of Pacific Star Development closed up 11 per cent to 12.3 cents on Wednesday.
Correction note: This article has been edited for accuracy.