Medtecs International Terminates Joint Venture with Hongray and Sells Cambodian Glove Subsidiary

Medtecs International Corporation Limited (“Medtecs” or the “Company”), a leading supplier of medical consumables, has announced a major restructuring of its glove manufacturing operations in Cambodia, with important implications for shareholders and the Company’s strategic direction.

Key Developments Highlighted

• Termination of Joint Venture with Shijiazhuang Hongray Group Co., Ltd. (“Hongray”):
  • Medtecs and Hongray have mutually agreed to terminate their joint venture agreement (JVA) for the operation and expansion of a nitrile glove manufacturing facility in the Manhattan Special Economic Zone, Cambodia.
  • The decision follows a strategic review, with both parties reassessing their capital deployment, operational approaches, and expansion priorities in the face of challenging market conditions in the global glove sector.
  • No disputes triggered the termination; it was reached on an amicable basis.
  • Both companies are released from all future funding obligations, including the previously planned capitalisation of the joint venture company, Medtecs Hongray Pte. Ltd., to US\$50 million.
  • The JV Co will be voluntarily wound up under Singapore law.
• Disposal of Entire Interest in RMKH Glove (Cambodia) Co., Ltd. (“RMKH Cambodia”):
  • As part of the exit from the joint venture, Medtecs will sell 100% of its shares in RMKH Cambodia to Hongray in tranches for a total consideration of approximately US\$13.1 million, subject to net asset value adjustments.
  • RMKH Cambodia is the operator and owner of the glove manufacturing facility in Cambodia, with a net asset value of about US\$11.5 million as of the announcement date.
  • The transaction is structured with an initial cash payment of US\$5.0 million (about 38%) upon initial closing (expected around 7 May 2026), and the remaining 62% paid in instalments over 12 months.
  • Legal and beneficial ownership of untransferred shares will remain with Medtecs until full payment of the consideration.
  • Hongray is an independent third party; the transaction does not constitute an interested person transaction.

Important Shareholder-Relevant and Price-Sensitive Information

• Release from Capital Commitments and Risk Mitigation:
  • Termination of the JVA and sale of RMKH Cambodia allow Medtecs to avoid significant capital expenditure commitments and ongoing operating losses in the highly competitive glove sector.
  • This move frees up cash flow, strengthens capital discipline, and allows the Group to focus on core priorities.
  • The Board highlights that this strategic realignment reduces the Group’s exposure to ongoing operational, market, and execution risks associated with the glove manufacturing business.
• Secured Recovery of Intercompany Indebtedness:
  • As of 28 February 2026, RMKH Cambodia owes Medtecs an aggregate of US\$23.5 million in unsecured advances for capital expenditure and working capital.
  • After the disposal, this debt will remain in place (not waived or novated) and will be repaid via quarterly instalments of US\$325,000 over 10 years, with a 3% annual interest rate.
  • The debt will be secured by first-ranking charges over RMKH Cambodia’s assets, a share pledge, and a personal guarantee from Mr. Liu Guixi, controlling shareholder of Hongray.
  • Medtecs will have an irrevocable call option to buy back the core factory assets or 100% of the company at a nominal price or via debt set-off in case of default or at the end of the 10-year repayment period.
  • Legal advice confirms the enforceability of these security arrangements under Cambodian law.
• Financial Effects:
  • The disposal is expected to have a non-material impact on the Group’s net tangible assets per share, which remains unchanged at 18.195 US cents.
  • It improves the Group’s earnings per share (EPS), reducing net losses from US\$4.836 million to US\$2.671 million (EPS from -0.887 to -0.490 US cents).
  • The disposal constitutes a “disclosable transaction” under SGX Catalist rules and does not require shareholder approval.
• Potential Share Price Impact:
  • This announcement signals a significant shift in Medtecs’ business strategy, reducing exposure to the volatile glove manufacturing sector, improving its financial position, and securing long-term recovery of outstanding receivables.
  • The comprehensive security package and call option mitigate credit risks and provide Medtecs with downside protection.
  • The disposal’s structure allows Medtecs to retain an option to reacquire the business at a nominal price in the event of default, preserving potential upside should market conditions improve in the future.

Summary Table: Key Transaction Terms

Conclusion

This strategic move enables Medtecs to exit a capital-intensive and loss-making business, strengthens its balance sheet, and secures recoveries on outstanding loans while retaining optionality for the future. The Board considers the transaction in the best interests of the Company and its shareholders.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should consult their financial advisors and review official company disclosures before making any investment decisions. The information provided herein is based on company announcements and may be subject to change.

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