Hong Lai Huat Group unit disposes Singapore farm resort business to focus on Cambodia operations

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MAINBOARD-LISTED property and real estate developer Hong Lai Huat Group’s wholly owned subsidiary HLH Agri International will be disposing its entire equity interest in HLH Agri R&D for an aggregate consideration of S$4.8 million.

HLH Agri R&D is the legal owner of a 20-year leasehold agri-tainment farm resort operating under the name Gallop Kranji Farm Resort. It is located at 10 Neo Tiew Lane 2 and is currently leased by Blue Dolphin, which is the managing agent of the farm resort, from July 1, 2018 to June 30, 2021.

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The sale comes as the group intends to “completely focus on its business in Cambodia” with the proposed disposal being part of its efforts to strengthen its financial position.
Currently, more than 95 per cent of the group’s business operations is focused in Cambodia in areas including property, real estate and agriculture while the remaining 5 per cent comes the farm resort owned by HLH Agri R&D.

The board is of the opinion that the sale will be beneficial to the group in the long run, said the group in a regulatory filing on Sunday.

HLH Agri International has entered into a sale and purchase agreement with Gallop Green, a seafood farming and waste treatment disposal company, for the sale of the entire issued and paid up share capital of HLH Agri R&D, which comprises some 12.6 million ordinary shares.

Gallop Green has placed a goodwill non-refundable deposit of S$100,000 on the mutual understanding that the deposit shall be used to offset consideration payable upon completion of the deal.

HLH Agri R&D currently holds a S$300,000 security deposit from Blue Dolphin in relation to the lease agreement. The final settlement amount, after accounting for the goodwill deposit and the security deposit, will be S$4.4 million.

On a pro forma basis, assuming the disposal had taken place on Dec 31, 2020, loss per share would narrow to 3.40 Singapore cents for the year, from 3.84 cents. Net tangible assets per share will rise to 55.77 cents from 53.01 cents.

Shares of Hong Lai Huat ended Friday flat at 9.1 Singapore cents.

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