AF Global Limited Provides Detailed Update on Xuzhou Investment Liquidation and Asset Disposal

Singapore, 21 January 2026 – AF Global Limited (“AF Global” or the “Company”) has released a comprehensive update regarding the ongoing compulsory liquidation of its joint venture in Xuzhou, China, Xuzhou Yinjian LumChang Real Estate Development Co., Ltd (“XZYJLC”). This development holds significant implications for the Company’s financials, asset base, and future strategy. Investors and shareholders should take note of several key, potentially price-sensitive points detailed below.

Key Highlights of the Announcement

• Resolution to Conclude Xuzhou JV Liquidation:
  • AF Global’s wholly-owned subsidiary, L.C. Logistics Pte Ltd. (“LCLPL”), which holds a 55% equity stake in XZYJLC, has entered into a compulsory liquidation resolution agreement with its joint venture partner (Guangxi Yinjian Investment Co., Ltd.), which holds the remaining 45% stake.
  • The agreement aims to expedite the liquidation of XZYJLC and settle all outstanding disputes between the partners, which have persisted since 2017.
• Terms of the Asset Disposal (“Resolution Disposal”):
  • LCLPL will transfer its 55% equity interest in XZYJLC to the JV partner for a total consideration of RMB142 million (approx. S\$26.24 million).
  • Consideration breakdown:
    • RMB44.99 million (approx. S\$8.31 million) to be paid in cash.
    • RMB97.01 million (approx. S\$17.93 million) to be settled by assignment of debt owed by XZYJLC to the JV partner, transferred to LCLPL.
  • Repayment of the assigned debt will occur through the transfer of ownership of 239 office units and 64 carpark lots (the “Relevant Assets”) in Gulou Square, Xuzhou, to LCLPL.
• Valuation and Write-down of Assets:
  • The Relevant Assets are valued at 60% of their fair value (a 40% discount) based on the latest failed auction, reflecting the severe downturn in the Chinese property market and lack of buyer interest even at steep discounts.
  • The Company is considering an additional 10% write-down (total 50% discount to fair value) given the lack of bids at the last auction and the expectation that a bulk sale may require further price reductions. This write-down could amount to S\$2.99 million.
• Settlement of Outstanding Liabilities:
  • XZYJLC will pay RMB9.70 million (approx. S\$1.79 million) to Xuzhou Sancai Real Estate Sales Agency Co., Ltd. (“XZRES”) to settle debts, with AF Global ultimately having a 55% indirect interest in any residual balance, if any.
• Major Transaction and Shareholder Approval:
  • The Resolution Disposal is classified as a “major transaction” under SGX Listing Rules, with the consideration representing 22.81% of the Company’s market capitalization.
  • Shareholder approval may be required at an extraordinary general meeting (EGM), unless a waiver is granted by SGX.
  • Aspial Corporation Limited and Mr. Koh Wee Meng, holding 72.6% of voting rights, have indicated they will vote in favor if an EGM is convened.
• Financial Impact:
  • Book Value and Losses:
    • Book value of the disposed shares: S\$35.85 million.
    • Total consideration is S\$9.61 million below book value, resulting in a net loss of S\$16.41 million (comprising S\$14.13 million fair value loss and S\$2.28 million in expenses).
    • If the additional write-down is recognized, the total loss could rise to S\$19.15 million.
  • Earnings and NAV Impact (FY2024 pro forma):
    • Loss per share (assuming both KF Disposal and Resolution Disposal completed): increases from 0.01 to 0.22 Singapore cents. With the write-down, loss per share could reach 0.20 Singapore cents.
    • Net Tangible Asset (NTA) per share would decrease from 14.43 to 13.21 Singapore cents (or 12.95 cents with write-down).
    • Net Asset Value (NAV) per share would similarly decrease.
  • Cash Component and Repatriation Risks:
    • Only RMB44.99 million (approx. S\$8.31 million) is immediately receivable in cash. Repatriation of funds from China may be delayed due to foreign exchange controls.
    • Sale of the Relevant Assets may be challenging, and there is no certainty the Company can realize their booked value.
• Strategic Rationale:
  • The disposal allows AF Global to exit a protracted, loss-making joint venture, resolve expensive disputes, and focus management resources on its remaining businesses.
• Pending Use of Proceeds:
  • Due to ongoing scheme of arrangement for a potential acquisition of AF Global, specific use of disposal proceeds (including any distribution to shareholders) cannot be determined until the scheme’s outcome is clear. Proceeds will meanwhile be held for general corporate purposes.
• Process Risks and Uncertainties:
  • Finalization of the transaction is subject to agreement on definitive documentation with the JV partner. If not completed, the liquidator may revert to continuing the court-ordered liquidation process.
  • Material developments will be announced as they arise.

What Shareholders Need to Know

• This transaction will have a material negative impact on AF Global’s net asset value and earnings due to the significant write-downs and recognition of losses.
• Only a portion of the proceeds is expected as cash; the rest is in physical assets, which may be hard to monetize at target values due to weak market conditions.
• There are ongoing uncertainties regarding the completion of the transaction, repatriation of funds, and the eventual use of proceeds.
• Major shareholders have indicated support, but the transaction is subject to regulatory waiver or approval at an EGM.
• The transaction settles long-running disputes and enables the Company to redirect resources, but crystallizes a substantial loss on a legacy investment.

Conclusion

This update is highly material and likely to be price sensitive, as it involves the disposal of a major asset, significant write-downs, and changes to the Company’s asset and earnings profile. Investors should monitor further announcements regarding the completion, write-down decisions, and any changes to the use of proceeds, especially in the context of the potential scheme of arrangement for the Company’s acquisition.

Disclaimer: This article is a summary and analysis based on public disclosures by AF Global Limited as of 21 January 2026. It does not constitute investment advice. Investors should consult the full announcement and seek professional advice before making any investment decisions. The author and publisher accept no liability for actions taken based on this article.

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