KUALA LUMPUR: Hap Seng Consolidated Bhd

(HSCB) has proposed to dispose of its 50.82% stake in Singapore-listed Hafary Holdings Ltd for S$140.03mil (RM446.38mil) cash.

In a filing with Bursa Malaysia, HSCB said its wholly-owned subsidiary Hap Seng Investment Holdings Pte Ltd (HSIH) has agreed to accept a voluntary conditional takeover offer from 23 Capital Pte Ltd for all 218.79 million Hafary shares held by HSIH.

The offer values each Hafary share at S$0.64, equivalent to about RM2.04. Upon completion of the proposed disposal, Hafary will cease to be a subsidiary of HSIH.

“While HSCB and its subsidiaries will forego future earnings contribution from Hafary, the proposed disposal enables the group to realise its investment in cash at an attractive valuation, thereby strengthening its financial position and enhancing financial flexibility.

“The proposed disposal also provides HSIH with the opportunity to exit the downstream segment of the building materials market and realise an estimated gross gain on disposal of approximately RM187.3mil,” HSCB said.

Of the RM446.38mil gross proceeds, RM445.38mil is earmarked for the repayment of borrowings within 36 months, while RM1mil will be used to defray expenses related to the disposal.

The debt repayment is expected to generate annual interest savings, net of tax, of about RM14.9mil.

On a pro forma basis, HSCB's net debt-to-equity ratio would improve to 0.28 times from 0.41 times following the disposal.

Hafary is involved in the import, export, distribution, wholesale, trading and manufacturing of building materials including tiles, stone, mosaic, wood flooring, quartz tops and sanitary ware and fittings.

The proposed disposal is expected to be completed by December 2026, upon the successful closing of the offer.

Maybank Investment Bank Bhd has been appointed as principal adviser to HSCB for the proposed disposal.

Trading in Hap Seng's securities is scheduled to resume at 10am on Monday, after trading was halted at 9am pending the announcement.