The
information contained within this announcement is deemed by the
Group to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 ("MAR").
20 March 2019
WALCOM GROUP LIMITED
(“Walcom” or “the Group”)
Further re.
disposal of Walcom Bio-Chem (Thailand) Company Limited
Further to its announcement on 13 March
2019, Walcom announces that it has today entered into an
agreement for the disposal of its entire interest in its 55 per
cent. owned subsidiary Walcom Bio-Chem (Thailand) Company Limited (“Walcom Thailand”),
to Mr Paitoon Buddhinunta-opas (the
“Purchaser”), General Manager of, and 40 per cent. shareholder in,
Walcom Thailand for a cash consideration of 16.5 million Thai Baht, (approximately
HK$4.1m or £0.39m), (the “Disposal”).
Certain amounts owed to the Purchaser will be repaid from the
consideration for the Disposal such that the net proceeds to Walcom
will be 12.1 million Thai Baht,
(approximately HK$3.0m or
£0.29m).
Walcom Thailand’s operating business is focused on the trading
of chemical animal feed additive products in Thailand. Following the Disposal, the
Purchaser will own 95,000 shares in Walcom Thailand, representing
95 per cent. of Walcom Thailand’s issued share capital, with the
remaining 5,000 shares being held by minority shareholders.
As previously announced, Walcom’s working capital position has
been severely constrained due to difficult trading conditions and
defaults on payments from one of its major customers. The net
proceeds of the Disposal will be used to ease the Group’s working
capital position in the short term and the Board expects that these
net proceeds will enable the Group to meet its liabilities as they
fall due until the middle of June
2019. The Group continues to closely monitor its working
capital position and continues to consider all options available to
it in order to mitigate its working capital position.
In conjunction with the Disposal, the Group has entered into an
agreement with Walcom Thailand, whereby Walcom Thailand has been
appointed as the Group’s exclusive partner in Thailand for the sale and distribution of
Walcom’s products (the “Distribution Agreement”). The Distribution
Agreement will run for five years and renews automatically unless
either party serves notice terminating the agreement. The
Distribution Agreement includes an undertaking by Walcom Thailand
to purchase a minimum of eighty tones of Walcom products every
year, subject to review by both parties on an annual basis. All
other terms of the Distribution Agreement mirror those in place
between Walcom and Walcom Thailand prior to the Disposal. As a
result of the Distribution Agreement, the Board expects Walcom
Thailand will remain a significant trading partner of the Group,
and will continue to contribute to the Group’s revenues.
In the year ended 31 December
2017, Walcom Thailand had audited revenues totalling
HK$16.85m (c.£1.62m), and a profit of
HK$0.89m (c.£86k). As at 31 December 2017, Walcom Thailand had audited net
assets of HK$6.5m (c.£620k). The
Group reported in its unaudited interim results for the six months
ended 30 June 2018 that revenues for
Walcom Thailand were HK$8.12m
(c.£778k). Following the Disposal, Walcom Thailand will no
longer be a subsidiary of Walcom and its financial information will
no longer be consolidated with that of the Group. As a result
of the entering into of the Distribution Agreement, the future
financial contribution of Walcom Thailand will be reflected in
Walcom’s financial reports on the same basis as other customers of
the Group.
The Purchaser is an existing director of Walcom Thailand. Both
the Disposal and the entering into of the Distribution Agreement
are deemed to constitute related party transactions under the AIM
Rules for Companies. The directors of Walcom, having consulted with
the Group’s nominated adviser, Allenby Capital Limited, consider
the terms of the Disposal and the Distribution Agreement to be fair
and reasonable insofar as the Group’s shareholders are
concerned.
Further enquiries:
Walcom Group Limited
Francis Chi (Chief Executive Officer)
Albert Wong (Chief Financial Officer) |
+852 2494 0133 |
Allenby Capital Limited
David Hart / Asha Chotai |
+44 20 3328 5656 |