“The proposed disposals are undertaken for the purpose of reducing the cost associated with maintaining the loss-making subsidiary, ie Signature Facade and thereby improving the balance sheet of Signature Group.”
KUALA LUMPUR (June 20): Kitchen cabinet maker Signature International Bhd is selling its aluminium and facade businesses for RM17.53 million amid increasing challenges in the construction market such as cost overrun and a spike in project material costs.
Proceeds raised from the divestment will be utilised for working capital and repayment of bank borrowings, said Signature in a filing with Bursa Malaysia on Monday (June 19).
Signature, which is 31%-owned by Chin Hin Group Bhd, is selling its entire equity interest in Signature Aluminium Sdn Bhd and a 51% stake in Signature Facade Treatment Sdn Bhd, to another aluminium and facade player Fortune Greenbest Sdn Bhd, equally owned by Por Teong Eng and Lim Sor Yee.
The other 49% stake in Signature Facade is held by Signature Aluminium (24%), Yong Chuan Chin (15%) and Ang Chek Peow (10%).
“The proposed disposals are undertaken for the purpose of reducing the cost associated with maintaining the loss-making subsidiary, ie Signature Facade and thereby improving the balance sheet of Signature Group,” said Signature.
The group, meanwhile, also entered into a settlement agreement for Signature Facade to repay advances amounting to RM34.45 million over 12 monthly payments.
“It [the divestment] is also in line with Signature group’s strategy through divestiture and to improve the operational efficiency of the group as the management is able to spend more time to focus on the home furnishing industry and interior fit-out works,” the group said.
As at March 31 this year, Signature’s cash and bank balances, together with fixed deposits with licensed banks amounted to RM23.61 million, down 23.6% from RM30.91 million at end-2022.
The group also owned short-term investments in quoted shares and unit trust funds amounting to RM31.72 million as at end-March, down 11.6% from RM35.87 million at end-2022.
Bank borrowings, however, rose 4.0% over the same period to RM234.38 million as at end-March this year, of which RM130.91 million are long-term and RM103.47 million are short-term.
Signature said the divestments, which do not require shareholders’ approval, are expected to be completed by the third quarter this year.
Source: EdgeProp.my
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