Singapore-based Pan-United Corporation is looking to undertake a demerger of its subsidiary Xinghua Port Holdings, the holding company of the group’s Ports Business.
Following the completion of the proposed demerger, Xinghua, formerly known as Pan-United Infrastructure, and its group of subsidiaries will cease to be a part of Pan-United Corporation and the company will no longer be involved in the ports business going forward.
The group currently has two core business divisions namely, the concrete and cement business and the port business. The Ports Business is distinct from the C&C Business, and both are running independently from one another, according to Pan-United.
“The Board believes that the proposed de-merger will allow the company and Xinghua to focus on their respective core businesses, and implement strategies to grow and expand their businesses independently, as well as to gain financial autonomy,” the company informed.
The demerger would also include a proposed proposed listing of Xinghua on the main board of the Stock Exchange of Hong Kong. Prior to the listing, Xinghua intends to conduct a restructuring exercise, pursuant to which it plans to capitalize an existing SGD 102 million inter-company loan between the Pan-United and Xinghua into share capital. Additionally, all other inter-company loans will be repaid before the proposed capitalisation.
The move follows a conditional sale and purchase agreement signed in October 2016 with the investment holding company Sedgefield Corporation, through which Pan-United Corporation agreed to sell its subsidiaries Pan-United Shipping and and P.U. Vision.
Pan-United earlier informed that the deal was made on the back of a challenging industry and market environment, plagued by low freight rates, softening market demand within Southeast Asia, and a severe oversupply in vessel capacity, due to which the Pan-United Corporation’s tug and barge business had been incurring losses since 2013.