GKE Corporation has, on March 8, entered into a definitive sale and purchase agreement (SPA) with Hung King Holdings for the proposed sale of its 65% stake comprising 32,500 shares in Van Der Horst Logistics.

The SPA was signed by Hung King’s nominee, GKEML Singapore, which is unrelated to the group.

The announcement is related to the memorandum of understanding (MOU) that was signed between GKE Corporation and Hung King Holdings on Sept 9, 2020.

Hung King Holdings owns the remaining 35% stake in Van Der Horst Logistics.

Under the MOU, the sale stood at a consideration of RMB58.5 million ($12.1 million).

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Since the signing of the MOU, GKEML has paid a deposit of RMB2.8 million.

Of the remaining sum, 20% of the sale consideration, after the deposit, will be paid upon the signing of the SPA.

SEE: GKE Corporation reports earnings of $2.9 mil in 2H20; turnaround from losses

Another 30% of the sale consideration will be paid on the date of completion.

The balance of 50% will be paid within one year from the date of the SPA. As security for the payment, GKEML has gotten the execution of a personal guarantee issued by its ultimate shareholder, Li Jing, in favour of GKE Corporation.

Should GKE Corporation choose not to proceed with the completion of the SPA, it will have to refund 22% of the purchase consideration to GKEML.

Should the reverse happen, GKE Corporation is entitled to forfeit and retain the deposit paid.  

GKEML will bear all expenses incurred by the Van Der Horst group from Aug 1, 2019, to Sept 30, 2020. GKE Corporation will be entitled to receive 65% of the cash in the bank account of Van Der Horst as at the date of completion.

Once completed, GKEML will pay 65% of the total expenses and 65% of the cash in the bank of Van Der Horst.

Shares in GKE Corp closed 0.4 cent lower or 3.2% down at 12.3 cents on March 8.