Serial System to divest stake in Australian laundry business for $43 mil

Serial System to divest stake in Australian laundry business for $43 mil

Michelle Zhu
12/09/18, 11:16 am

SINGAPORE (Sept 12): Serial System, the distributor of electronic components and consumer products, is divesting its entire 27.34% stake in SPL Holdings (Australia) to Anchorage Bridge Street for US$31.2 million ($43 million).

SPL Holdings is an Australia-based commercial laundry business whose clients include hospitality brands such as Hilton, Hyatt and Sofitel. On the other hand, the buyer is a company owned by funds managed by Australian private equity (PE) firm Anchorage Capital Partners.

Serial System first invested in SPL in 2014 with an initial 20% stake, with a further injection in 2016 that brought its stake in the company to 27.34%.

The group expects to recognise a gain of US$20 million from the sale of SPL, representing a premium of 179% over the company’s books value in SPL as at end-June this year.

In a press release on Wednesday, Serial System says it intends to use 40% of the net proceeds to repay its bank loans.

It also plans to issue a special dividend to shareholders as a result of the sale.

The rest of the proceeds will be retained for working capital to support the group’s main distribution businesses, as well as for future investments.

Serial System estimates that had the sale of its stake in SPL been completed in 2017, its earnings per share (EPS) would have risen to 3.31 US cents from 1.07 US cents on a pro-forma basis, while net tangible assets (NTA) would have increased to US16.04 cents per share from 13.81 US cents.

Its net gearing would have declined to 82% from 115%.

Derek Goh, the group’s executive chairman and CEO, says the group’s sale of SPL is “timely and particularly rewarding” given the returns, which he considers to be extremely attractive.

“We have been invested in SPL for more than four years now… The sales proceeds will come in handy for our main distribution business and for strengthening our balance sheet,” he comments.

While the disposal would have been subject to a vote by shareholders according to SGX listing rules, Serial System has obtained a waiver for the need to obtain such approval.  

As at 11.13am, shares in Serial System are trading 1 cent higher at 15 cents.

Treasure hunting

British collector and expert Harry Fane talks about what it takes to be the world’s foremost authority on vintage Cartier creations and how to spot a good investment buy at his Vintage Cartier Tank watch exhibition at Dover Street Market Singapore (May 20): Harry Fane’s love affair with Cartier began at the tender age of 17. It was the 1970s and his best friend showed up one day, decked out in two must-have items of the era: a pair of Gucci shoes with a gold buckle — “the height of fashion at the time” — and a Cartier watch. “I remember going, ‘Gosh, I really want both of....

Next stop: The interchange of public and private good

SINGAPORE (May 20): Two-minute intervals between trains. Fewer breakdowns. Clean, new buses running at a higher frequency. Bright LED screens displaying details of stops on both buses and trains. To many commuters who are enjoying these benefits, the meltdown of Singapore’s transport system in December 2011, and again in July 2015, is a distant memory. Certainly, services have improved significantly. There are new trains and buses, while existing ones have been spiffed up. There has been an overhaul of the older rail systems, presumably including fixing the grips for the electricity rail ....

Failed Innopac deal portends mining magnate Gutnick’s woes in Australia

SINGAPORE (May 20): The Australian Securities and Investments Commission (ASIC) is seeking judicial permission to wind down mining company Merlin Diamonds. The regulator is also probing into whether its chairman Joseph Gutnick failed in his duties. Gutnick, who is known as “Diamond Joe”, is under investigation for a A$13 million ($12.3 million) loan made by Merlin to AXIS Consultants, a private company linked to him. Merlin shares have been suspended from trading since October 2018. ASIC is seeking an order to appoint Deloitte to liquidate Merlin, owner of the Merlin Diamond Mine Pro....