Sitra Holdings, the manufacturer of wood-based furniture, has disposed of its entire stake in World Furnishing Hub for a consideration of $3.7 million.
The disposal was done through a sale and purchase agreement (SPA) with Sitra Holdings’ wholly-owned subsidiary Sitra Agencies and Hafary Pte Ltd, a wholly-owned subsidiary of Hafary Holdings Limited (HHL).
The shares held by Sitra Agencies in World Furnishing Hub represents 10% of the total issued and paid up capital of the latter.
Sitra Agencies, Hafary, along with Ching Chiat Kwong and Low See Ching (together known as the promoters, have entered into a deed of termination and settlement on March 24 relating to agreements entered into by Sitra Agencies and Hafary.
Ching is a substantial shareholder of HHL, while Low is a director and controlling shareholder of HHL.
Ching is also the executive chairman and CEO of Oxley Holdings, while Low is the executive director and deputy CEO of Oxley Holdings.
The proposed disposal is considered a “major transaction” of Sitra Holdings under SGX-ST’s Catalist rules. It will be subject to the approval of the shareholders of the company at an extraordinary general meeting (EGM).
The shares will be sold to Hafary in six tranches. The first tranche will see the completion of the sale of 50% of the sale shares, followed by the sale of 10% of the sale shares across five tranches.
World Furnishing Hub was incorporated as a joint venture company by Sitra Agencies, Hafary, Ching and Low on July 2, 2013, with a total issued and paid-up share capital of $1 million comprising 1 million shares.
It is mainly in the business of property ownership, and its purpose was to acquire the leasehold interest of the property at 18 Sungei Kadut Street 2.
World Furnishing Hub’s role as a JVC was also to develop the property envisioned for the International Furniture Park in Sungei Kadut.
On Dec 2, 2013, Sitra Holdings, the promoters and World Furnishing Hub entered into a SPA where Sitra Holdings agreed to sell the property to World Furnishing Hub for $8.65 million. A shareholders’ agreement (SHA) was entered into between Sitra Holdings and the promoters to set out the terms pertaining to the business and affairs of World Furnishing Hub.
In addition, the promoters entered into a put and call option deed where Sitra Agencies has the right to require Hafary, Ching and Low to purchase all the shares held by Sitra Agencies in World Furnishing Hub.
Under the option deed, the consideration for the option shares should be the higher of either 10% of the market value of the property, or 10% of the sale price or contracted sale price of the property.
The net tangible asset (NTA) value attributable to the sale shares is -$413,955, according to World Furnishing Hub’s financial statements for the FY2020 ended Dec 31, 2020.
The net profits attributable to the sale shares is $41,100. The loss on the proposed disposal is $1.3 million.
Sitra Holdings says the proposed disposal is in “the best interest” of the company. World Furnishing Hub has been loss-making since the temporary occupation permit (TOP) for the property following its redevelopment was issued on Aug 25, 2016. World Furnishing Hub has also recorded net losses of $1,01 million, $2.27 million, $1.37 million and $576,170 for FY2016, FY2017, FY2018 and FY2019 respectively, though it reversed its losses to record net profit in FY2020.
Shares in Sitra Holdings closed 0.1 cent lower or 5.9% down at 1.6 cents on March 24.