Jubilee Industries enters deal to sell WE Components for US$11M

U.S. one-dollar and five-dollar currency notes; taken September 2018.U.S. one-dollar and five-dollar currency notes; taken September 2018.

Jubilee Industries has entered a memorandum of understanding (MOU) to sell its wholly owned subsidiary WE Components for US$11 million, or around S$15 million, the company said in a filing to SGX Saturday.

The consideration includes a US$4 million payment for the proposed disposal and a stock-taking of WE Components, referred to as the electronics business unit, or EBU, the filing said, noting the EBU’s inventory had a book value of around US$7 million as of end-September.

Jubilee highlighted that the consideration of US$11 million exceeds its market capitalisation of S$13.6 million, saying that pointed to the “deep value” in the deal.

WE Components trades in electronics parts and communications equipment.

“The proposed Disposal will allow the group to capitalise on growth opportunities, unlock the value of the assets in [WE Components] and re-strategise its financial and capital resources. With the net proceeds, the group will have more working capital to fund and expand its business and undertake projects and opportunities that may arise in the future,” Jubilee Industries said in the statement.

The purchaser is Huangzhou Yuye Technology, according to an official translation.

The Hangzhou, China-based purchaser is a distributor of semiconductor products in China, with the deal expected to expand its overseas chip agency business, the filing said.

Jubilee’s Executive Chairman and Chief Executive Officer Dato Terence Tea said the company was confident in the prospects of Jubilee’s mechanical business unit and other investments.

Tea is also the executive chairman and managing director of Accrelist, which owns around 53 percent of Jubilee.

The deal is subject to shareholder approval, the filing said.