Union Steel Holdings Announces Sale and Purchase Agreement for Disposal of Fastweld Engineering Construction Pte Ltd

Key Highlights of the Transaction

• Union Steel Holdings Limited (the “Company”) has entered into a definitive Sale and Purchase Agreement (“SPA”) for the disposal of its wholly-owned subsidiary, Fastweld Engineering Construction Pte. Ltd. (“Fastweld”), to Eneco Singapore Pte. Ltd. (the “Buyer”) for a cash consideration of S\$4,300,000.
• The Buyer is a subsidiary of Eneco Energy Limited, a company listed on the Singapore Exchange.
• The transaction is the result of a strategic review by the Board, aiming to optimize capital allocation and streamline the Group’s operations to focus on its core engineering and manufacturing businesses.

Details of the Buyer and Target Company

• Eneco Singapore Pte. Ltd. is an investment holding company conducting wholesale activities on a fee or commission basis.
• Fastweld Engineering Construction Pte. Ltd. operates as an engineering, procurement, and maintenance contractor serving the marine, offshore, and industrial sectors, focusing on process plant maintenance, site-based execution works, and project-based engineering activities.

Rationale for the Proposed Disposal

The Board undertook a strategic review following recent acquisitions, including Fastweld in November 2022. Although Fastweld has contributed positively, its project-based, execution-driven business model differs from the Group’s core operations, which are more fabrication and production-focused. Divesting Fastweld will allow management to concentrate resources on business areas aligned with long-term strategic priorities.

Salient Terms of the SPA

• Consideration: S\$4,300,000 in cash, mutually agreed upon after arm’s length negotiations, considering Fastweld’s net asset value, historical performance, business prospects, and strategic rationale.
• Conditions Precedent:
  • Approval from Singapore Exchange (SGX-ST) and Eneco Energy Limited’s shareholders.
  • Satisfactory due diligence (business, financial, tax, accounting, legal) by the Buyer.
  • No material adverse changes in Fastweld’s business or financial position between signing and completion.
  • Seller’s warranties to remain true and accurate at completion.
  • All necessary regulatory consents and approvals obtained.
• The Buyer may waive certain conditions at its discretion.

Financial Information and Impact

• Relative Figures (per SGX Rule 1006):
  • Net asset value of Fastweld vs Group: 2.5%
  • Net profits attributable to Fastweld vs Group: 5.2%
  • Consideration vs market capitalisation: 7.3%
• As figures based on Rules 1006(b) and (c) exceed 5% but do not exceed 20%, this is classified as a “disclosable transaction” under Chapter 10, not requiring shareholder approval.
• Book Value and Gain:
  • Book value of Sale Shares: S\$2,542,000 (as at 31 December 2025).
  • Gain on disposal: S\$1,758,000 before transaction expenses.
• Application of Proceeds: Net proceeds will be used for debt reduction, working capital, and/or future growth opportunities, depending on market conditions and capital needs.

Illustrative Financial Effects

• Net Tangible Assets (NTA):
  • Before disposal: S\$88.54 million (NTA per share: 74.95 cents)
  • After disposal: S\$90.55 million (NTA per share: 76.65 cents)
• Earnings Per Share (EPS):
  • Before disposal: 8.08 cents
  • After disposal: 9.78 cents

Potential Price Sensitive Information for Shareholders

• The disposal will result in an immediate gain and improve both the NTA and EPS of the Group, which could be viewed positively by the market.
• The transaction is not an “interested person transaction” under SGX rules, as the Buyer is not an associate of any directors, CEO, or controlling shareholders of the Company.
• Chairman and CEO Mr. Ang Yu Seng holds positions in both Union Steel and Eneco Energy Limited, but the transaction structure does not trigger related party transaction rules.

Other Information

• No new directors are being appointed in connection with the transaction, and no new service contracts are to be entered into.
• A copy of the SPA is available for inspection at Union Steel’s registered office for three months from the announcement date.

Next Steps and Cautionary Statement

The Company will provide further updates as required, including upon completion of the Proposed Disposal.
Shareholders and potential investors are advised that the completion is subject to several conditions precedent and are urged to exercise caution when dealing in the Company’s securities.

Disclaimer

This article is provided for informational purposes only and does not constitute investment advice. Investors should consult their professional advisers and carry out their own due diligence before making any investment decisions. The Company’s official announcements and SGX filings should be referred to for full and accurate information.

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