PETALING JAYA: Handal Resources Bhd is disposing of its 51% stake in Handal Simflexi Sdn Bhd to Shanghai EB Pipeline Engineering Ltd (SHEB) for RM3.26 million.
In a filing with Bursa Malaysia, Handal said it has signed a share sale agreement (SSA) with SHEB, and a novation agreement with SHEB and Kemuncak Lanai Sdn Bhd for the proposed disposal.
SHEB currently holds the remaining 49% stake in Handal Simflexi. Upon completion of the disposal, Handal Simflexi will cease to be a subsidiary of Handal.
Handal said it originally acquired Handal Simflexi with the objective of diversifying into technology-based research and development (R&D) activities. On July 11, 2018, Handal Simflexi announced that it has received a letter of award for the joint development of a subsea technology solution.
“After taking into consideration the significant investments required for the joint development, Handal’s management is of the view that the project risk-reward profile is unsuitable for Handal,” it said.
“SHEB has indicated its commitment to proceed with the R&D project and this has provided an opportunity for Handal to divest its stake in Handal Simflexi and recover its investment,” it added.
In addition, the signing of the agreements will bring an end to the ongoing litigation between Kemuncak and Handal, as Kemuncak has agreed to withdraw its Kuala Lumpur High Court suit with no order as to costs.
Upon completion of the SSA, Kemuncak will have no further claim against Handal in relation to the initial SSA.
The disposal will result in a loss of RM4,000 to Handal after taking into consideration of the unaudited net book value of the investment in Handal Simflexi amounting to RM3.26 million as at Dec 31, 2018.
Handal will use the proceeds arising from the disposal for general working capital, which may be used for payment to suppliers and to defray project and administrative overheads.
Source: The Sun Daily