Koon Holdings is proposing a bonus issue of up to 81,994,000 new ordinary shares , on the basis of one bonus share for every one existing ordinary share held by shareholders of the company.

Koon Holdings says the company is proposing the bonus Issue to increase the issued share capital base of the company to reflect the growth and expansion of the group’s business, and at the same time, to reward shareholders for their loyalty and continuing support of the company.

Meanwhile, Koon Construction & Transport Co. or KCTC, today entered into a put and call option agreement with ASL Shipyard relating to the sale of the property located at 17B Pandan Road, Singapore.

Under the agreement, ASL Shipyard may exercise the call option to purchase the property for $7.5 million one week from the date ASL Shipyard obtains the necessary approvals.

If ASL Shipyard does not exercise the call option within that one week, KCTC may, within one week thereafter, exercise the put option to require ASL Shipyard to purchase the property.

In addition, Gems Marine, another Koon Holdings’ unit, today also entered into a sale and purchase agreement with Capitol Shipping, which also belongs to the ASL group of companies, relating to the sale of certain tugboats and barges for $7.13 million.

Koon Holdings says it is putting up the property for sale because the group intends to focus on its core business of construction and complementary business of land-based plant and equipment rental. The group also intends to divest its marine logistics division.

If the proposal to sell the vessels is approved by shareholders, there would no longer be a need for the group to be located at a premises with water-front access and the group’s administrative offices can move into a smaller leasehold non-waterfront property.

The property sale will also generate cash for the group which may be used for working capital purposes and to finance the acquisition of a leasehold non-waterfront property.

As for the vessel sale, Koon Holdings says there has been a slowdown in demand for marine transportation since the second half of 2009.

This slowdown has resulted in a more competitive environment for the marine logistics business, with the group’s revenue and profits from the marine logistics business suffering a decline in both revenue and profits.

The management believes that to effectively compete in the marine logistics business, the group would need to improve its mix of vessels and this would require substantial additional capital expenditure.

In view of the current market conditions of the marine logistics business, the management is of the opinion that it would not be prudent to incur substantial additional capital expenditure in the marine logistics business and the group should instead focus on its core business of construction and the ancillary and complementary business of land-based plant and equipment rental and precast manufacturing.