Singapore-listed SHS Holdings is selling its refined petroleum distribution business for about $100.3 million. The move will leave the group with two other core businesses: Structural steel and facade; and corrosion prevention.
Group chief executive Henry Ng said in a statement that the proposed divestment is "part of our ongoing strategic review to streamline the group's businesses, seeks to unlock shareholder value, and increases the overall financial capacity and flexibility of the group".
SHS said yesterday it has signed a conditional share sale and purchase agreement with Brenntag (Holding) BV, a subsidiary of German chemical distribution company Brenntag AG, for the disposal of its entire shareholding interests in two wholly-owned subsidiaries - Tat Petroleum and Axxmo International - and PT Tat Petroleum, a unit of Tat Singapore.
Tat Petroleum offers supply chain management of petroleum derived products and is the appointed lubricants distributor for an international oil major in Singapore, Hong Kong, Bali and Vietnam; while Axxmo International distributes waterproofing chemicals.
The divestment is expected to be completed by the fourth quarter of this year. Net proceeds, after deducting costs and expenses, are estimated to be $98.9 million, which will be used for working capital requirements, general corporate purposes and reducing the external borrowings of the group.
Assuming the proposed disposal was completed on Jan 1 last year, the effect on the group's earnings per share for the 2014 financial year would have been 7.6 cents after the disposal, versus 2.59 cents before.
The group's refined petroleum division accounted for the bulk of the company's revenue in the second quarter, or about $82.6 million, and $9.8 million in gross profit.
Structural steel and facade contributed $6.2 million in revenue and $1.3 million in gross profit, while corrosion prevention contributed $5.5 million in revenue and $1.6 million in gross profit.
Additionally, the group has made investments in an executive condominium development here which will be completed next year, and an offshore drilling company that will own and operate tender rigs.
The counter closed 1.5 cents higher at 25 cents on Wednesday. Trading in its shares was halted pending yesterday's announcement, which was made after markets closed.