Mencast Holdings Announces Potential S\$21 Million Asset Disposal – Key Details for Investors

Introduction

Mencast Holdings Ltd. (“Mencast” or the “Company”) has made a major announcement that is likely to attract investor attention. The Company’s wholly-owned subsidiary, Mencast Marine Pte. Ltd. (the “Vendor”), has granted an Option to Purchase to Grandwoods Trading (Singapore) Pte Ltd (the “Purchaser”) for the sale of its leasehold property at 42B Penjuru Road, Singapore 609163 for a consideration of S\$21,000,000. The transaction, if completed, could have a significant impact on the Company’s balance sheet, deleveraging efforts, and overall financial position.

Key Points of the Proposed Disposal

• Buyer & Transaction Structure: The Purchaser is an independent third party engaged in metal recycling, trading, warehousing, and fabrication. The Option to Purchase was granted on 16 February 2026 and will remain valid until 4:00 p.m. on 18 March 2026.
• Property Details: The asset is a JTC leasehold property (30-year tenure from 1 March 2011) comprising a single-user industrial factory and a 4-storey ancillary office building. Land area is about 16,200 sqm, with a gross floor area of approximately 13,825 sqm. The property currently houses the Group’s propulsion manufacturing operations.
• Consideration & Valuation: The agreed consideration is S\$21 million. An independent valuation (Edmund Tie & Company (SEA) Pte Ltd, dated 31 December 2025) placed the open market value at S\$24.3 million, suggesting the sale is below the latest market valuation.
• Financial Impact: The net carrying amount of the property is S\$12.268 million (as of 30 June 2025). The disposal is expected to result in a gain of approximately S\$7.732 million after deducting S\$1 million in relocation, moving costs, professional fees, and other related expenses.

Terms and Conditions

• Payment Structure:
  1. S\$210,000 Option Fee (paid upon grant of Option)
  2. S\$840,000 Balance Deposit (upon exercise of Option, held by Vendor’s solicitors as stakeholder)
  3. Balance payable upon completion

  If the Option is not exercised, the Option Fee is forfeited.

• Conditions Precedent:
  • JTC’s approval for the sale and assignment of lease, including waiver of its right of first refusal (ROFR)
  • Regulatory approvals for intended use (metal recycling, trading, etc.)
  • Vendor to dismantle connecting bridge to 42A Penjuru Road, reinstate fencing, and remove/retain overhead cranes as required
  • Shareholder approval if required under SGX rules (though currently not required)
• Rescission Provisions: If JTC approval is not obtained within six months, rescission terms depend on which party is at fault. If JTC exercises ROFR or if shareholder approval (if required) is not obtained by 29 May 2026, the deal is voided and all monies are refunded.
• Completion: Completion is set for four months after receipt of all required JTC approvals, including confirmation of any required decontamination works.

Strategic Rationale and Use of Proceeds

• Deleveraging & Balance Sheet Strengthening: The disposal is part of Mencast’s ongoing strategy to optimise its asset base and reduce borrowings. This transaction will allow the Group to meet and exceed its aggregate deleveraging target of S\$55 million under its debt restructuring plan.
• Operational Continuity: The disposal does not involve the sale of any business or revenue-generating operations. The Group’s propulsion manufacturing and MRO activities will be relocated to the adjacent property at 42A Penjuru Road, ensuring minimal disruption.
• Application of Proceeds: Net proceeds (~S\$20 million after costs) will be used primarily to repay loans secured on the property, discharge the mortgage, and further reduce borrowings.

Financial Effects

• Net Tangible Assets (NTA):
  • Pre-disposal NTA: S\$28.57 million (6.19 cents/share)
  • Post-disposal NTA: S\$35.94 million (7.79 cents/share)
• Earnings Per Share (EPS):
  • Pre-disposal net profit: S\$2.419 million (0.53 cents/share)
  • Post-disposal net profit: S\$10.894 million (2.37 cents/share)
• Transaction Size: The relative figures under SGX Catalist Rule 1006(a) and 1006(c) are 36.8% and 49.4%, respectively. This classifies the disposal as a “discloseable transaction,” not requiring shareholder approval.

Other Noteworthy Details for Shareholders

• No Director or Substantial Shareholder Interest: None of the directors or major shareholders have any interest (direct or indirect) in the disposal other than via their shareholdings.
• Documents for Inspection: The Option and valuation report can be inspected at the Company’s registered office for three months.
• Caution in Trading: The transaction is subject to the exercise of the Option and fulfillment of all conditions precedent. There is no certainty the disposal will be completed.
• Further Announcements: Mencast will update shareholders on any material developments.

Potential Price-Sensitive Aspects

• Significant Strengthening of Balance Sheet: If completed, the disposal will substantially strengthen Mencast’s balance sheet, reduce gearing, and improve profitability metrics.
• Disposal Price vs Valuation: The sale price is below the independent valuation, which may attract scrutiny but still delivers a substantial gain over the carrying value.
• Non-core Asset Sale: The disposal does not affect core business operations, reducing execution risk.
• Conditionality: The deal remains subject to regulatory and, potentially, shareholder approval, and may not be completed.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should exercise caution and conduct their own due diligence. The completion of the proposed disposal is subject to several conditions, and there is no guarantee that the transaction will proceed. Readers should consult their professional advisers before taking any action related to the securities of Mencast Holdings Ltd.

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