Keppel Sells Logistics Units to Sinotrans

Maritime Activity Reports, Inc.

September 29, 2019

Image: Keppel Corporation Limited.

Image: Keppel Corporation Limited.

Keppel Telecommunications & Transportation (Keppel T&T) has entered into agreements to divest its entire stakes in Keppel Logistics (Foshan) Co (KLF) and Keppel Logistics (Hong Kong) to Sinoway Shipping, a subsidiary of Sinotrans Limited, for about S$39 million.

Expected to be completed in 2019, the proposed divestments are in line with Keppel T&T's strategy to unlock value and recycle capital, allowing the company more flexibility to pursue other opportunities.

Thomas Pang, CEO of Keppel T&T, said, "The divestments are part of Keppel T&T's efforts to sharpen its focus and reallocate capital to grow other parts of its businesses. We would like to thank Sinotrans, who has been our long-term partner in owning and operating KLF and KLHK, for their many years of collaboration and support."

Located in Foshan, Guangdong Province, China, KLF provides port business services, dock operations, and warehousing services, and owns among others, Lanshi port (which is pending closure by the local government due to their redevelopment plans) and a 60% interest in Keppel Logistics (Foshan Sanshui Port) Company Limited, which operates Sanshui port.

Pursuant to the terms of an equity transfer agreement, Keppel T&T will sell its 70% interest in KLF to Sinoway Shipping for a total cash consideration of RMB 176.4 million (approximately S$ 34.2 million), subject to post-closing adjustments. Sinoway Shipping will also provide RMB 48.5 million (approximately S$ 9.4 million) to KLF for KLF to repay its shareholders' loan due to Keppel T&T.

KLHK provides freight forwarding and barging services between Hong Kong, Shenzhen and Foshan.

Pursuant to the terms of the sale and purchase agreement entered into with Keppel T&T, as guarantor, and Sinoway Shipping as purchaser, Keppel T&T's wholly-owned subsidiary, Steamers (HK) Limited (Steamers) will sell its 70% interest in KLHK to Sinoway Shipping for a total cash consideration of RMB 25.8 million (approximately S$ 5.0 million), subject to post-closing adjustments.

The consideration for the divestment of interests in KLHK was arrived at on a willing-buyer willing-seller basis, taking into account the current and projected income and cash flows of KLHK, and the book value and net tangible asset value of Steamers' 70% interest in KLHK as at 30 November 2018, which were both approximately RMB 22.8 million (S$4.5 million).

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