Dye maker Matex International has fully disposed of its stake amounting to 60% in Matex Chemicals for a consideration of RMB6.11 million ($1.3 million).

The company and its subsidiaries, Shanghai Matex Chemicals, Amly Chemicals, Dedot Trading (Shanghai), and Matex Chemicals Technologies (Shanghai), had entered into an agreement with Shengzhou Lv Huan Digital Offset Printing for the sale of the 60% of Matex Chemicals’ registered capital on April 2.

Matex Chemicals was incorporated in China on Dec 3, 2003, with an existing registered capital of US$4 million ($5.4 million).

Based on its unaudited consolidated financial statements for the FY2020 ended Dec 31, 2020, Matex Chemicals recorded revenue of $12.0 million in revenue and a $7.2 million loss before tax.

As at Feb 28, the company was in net tangible liabilities position of $1.9 million. Matex Chemicals is in the business of producing dyes, textile printing and dyeing auxiliaries, and is based in Taixing, China.

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The consideration for the equity was calculated based on Matex Chemicals’ financial statements as at Feb 28.


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In addition to the consideration, which is fully payable in cash, Shengzhou Lv Huan Digital Offset Printing will pay off Matex Chemicals’ loans amounting to RMB57.9 million to Matex International.

A deposit of RMB5 million has already been paid, and will go towards the total consideration.

The indicative equity valuation, according to Beijing Colliers International Real Estate Valuation Co, is RMB6.0 million, which takes into account the property valuation of RMB81 million as at Feb 28.

The agreement will become effective once Matex International has obtained the approval of its shareholders for the proposed disposal, and once the two other shareholders of Matex Chemicals, Shanghai Tangzhen Investment Development (Group) and Shenyang Chemical Research Institute has issued written irrevocable waivers of their right of first refusal to acquire the equity.

The other shareholders of Matex Chemicals will also have to agree to sell their remaining 40% stake to Shengzhou Lv Huan and sign their respective transfer agreements.

If the conditions are not satisfied by Dec 31, either party has the right to terminate the agreement.

Matex International says Matex Chemicals has been loss-making since 2017 and that it does not expect the latter to turnaround in the foreseeable future due to the pandemic.

Matex Chemicals is also running at less than one-third of its capacity.

The proposed disposal will enable Matex International to recover the intercompany loans of RMB57.9 million. Matex International will also record an estimated gain on disposal of some $3.2 million due to the reversal of accumulated losses in its consolidated accounts.

Shares in Matex International closed flat at 3.3 cents on April 7.