Wah Seong sells remaining 30% stake in pipe manufacturing unit for RM31m

KUALA LUMPUR (March 22): Wah Seong Corp Bhd is selling its remaining 30% stake in pipe manufacturing unit Spirolite (M) Sdn Bhd (SPRL) to Lesso Malaysia Holdings Sdn Bhd (LMHSB) for RM30.8 million, cash, as part of its plan to divest non-core businesses within the group to streamline its operations and resources.

Wah Seong bought SPRL in March 2013 via its wholly-owned subsidiary Syn Tai Hung Trading Sdn Bhd (STHT), with an original cost of investment of RM17.19 million.

In August 2020, Wah Seong sold a 70% stake in SPRL to Lesso Malaysia for RM30.37 million cash.

At the time, besides streamlining the business, Wah Seong said the disposal was to collaborate with Lesso Malaysia, which it said was a market leader in the pipeline manufacturing business, with a wide international network. Under that deal, Wah Seong kept the remaining 30% with a put option to sell the remaining stake.

In a bourse filing, Wah Seong said it has exercised the put option on Tuesday (March 22) to sell the 30% stake.

On completion of the exercise, SPRL will cease to be the 30%-owned associate of STHT and an indirect associate of Wah Seong.

According to Wah Seong, the latest stake disposal will result in a one-off gain of about RM1.9 million, and increase its earnings per share by 0.26 sen.

It plans to use the proceeds from the disposal to partly repay its borrowings, and for working capital.

Wah Seong shares slipped 1.5 sen or 2.31% to close at 63.5 sen on Tuesday, giving it a market capitalisation of RM492.05 million.

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Wah Seong sells 70% stake in pipe manufacturing unit for RM30.37m

Source: TheEdge - 23 Mar 2022