Hoe Leong Corporation, through its wholly-owned indirect subsidiary Arkstar Unicorn Pte. Ltd., has disposed of its offshore utility support vessel, also named Arkstar Unicorn, for a proposed consideration of US$1.83 million ($2.51 million).

Arkstar Unicorn Pte. Ltd., on Aug 7, entered into a conditional memorandum of agreement (MOA) with Phoenix International LLC, a company established in the United Arab Emirates (UAE) on Sep 18, 2017.

Based on the unconsolidated financial statements of Hoe Leong Corporation for the FY19 ended Dec 31, 2019 the book value of the 496 metric tonne vessel was approximately $607,000 as at Dec 31, 2019. Net losses attributable to the vessel as at the same period came at around $5.0 million.

The consideration represents an excess of approximately $1.9 million over the book value of Arkstar Unicorn as at Dec 31, 2019. The net proceeds from the proposed disposal amounts to some $2.1 million after deducting estimated costs and expenses.

The gain on disposal after the completion of the proposed disposal amounts to an estimated $1.5 million.

According to the valuation report conducted by independent valuer M3 Marine Valuations, Arkstar Unicorn had a market value of US$1.5 million to US$2 million as at March 30, based on an “as is, where is” sale between a willing buyer and a willing seller in the Arabian Gulf.

Hoe Leong says it intends to utilise the net proceeds from the proposed disposal by repaying its existing bank borrowings due to DBS of $217,763. An approximate sum of $1.9 million will go towards the partial settlement of other liabilities of Arkstar Unicorn Pte. Ltd.

Shares in Hoe Leong last traded at 0.2 cents.