According to Union Steel, the move will allow the group to focus on its oil and gas engineering business.
Union Steel Holdings has, through its wholly-owned subsidiary, disposed of its 70%-owned subsidiary, Megafab Engineering, for a consideration of $3 million.
On Sept 26, Union Engineering, the wholly-owned subsidiary of SGX-listed Union Steel Holdings, together with Low Keng Kee Sebastian, entered into a non-binding term sheet with Manzu Wang.
Low owns the remaining 30% interest in Megafab Engineering, a company that was incorporated in May 1993 and provides land transport load handling engineering solutions. Megafab Engineering is the sole distributor in Singapore for products from equipment companies such as Effer, Hiab, Mutilift, Zepro and Geesinknorba. It also offers a wide range of specialised load handling equipment and components including truck-mounted cranes, tailgate systems and waste compactors.
The term sheet has set out the broad key terms and conditions of the proposed disposal. It will form the basis for discussion between the parties for a definitive share purchase agreement (SPA) and ancillary documents. The SPA and documents should be signed no later than six weeks from the date of the term sheet.
According to Union Steel Holdings, the purchaser, Wang, specialises in property investment and management, and wholesale trading in China.
She has a deep interest in heavy equipment and trucks and therefore approached Union Steel Holdings Limited to acquire Megafab Engineering Pte Ltd.
In turn, the proposed disposal will allow Union Steel to realise its investment value in Megafab Engineering for the benefit of the company’s shareholders.
The move will also allow the group to focus on its oil and gas engineering business, which has the potential to provide a regular and growing revenue stream, says the group.
Some of the terms of the proposed disposal include Megafab Engineering’s current employees being retained for a period of at least 12 months upon the completion of the disposal.
Shares in Union Steel closed flat at 70 cents on Sept 26.