JOHAN Holdings Bhd’s wholly owned subsidiary, Johan Investment Pte Ltd, has completed the disposal of its entire equity interest in Diners Club (Singapore) Pte Ltd (DCS) and DCS’s subsidiary, DinersPay Pte Ltd (DPPL), for RM313.98 million cash.
The disposal had resulted in an estimated gain of about RM210.85 million, which will result in estimated net assets per share of 32.25 sen upon completion on July 9, 2021.
Johan shares last traded at 14 sen.
“With the deconsolidation of DCS and DPPL, the group is virtually debt-free. The balance sheet is strong and will be further strengthened with the completion of the rights issue of RM38.93 million on July 28, 2021,” Johan noted in a statement yesterday.
The group is proposing a renounceable rights issue of 389.34 million shares at 10 sen per rights share, on a one rights share for two existing shares basis.
DCS provides charge and credit card services which contributed substantially to the group’s revenue under the hospitality and card business segment.
However, it had been recording substantial losses over the past five financial years which was worsened by the Covid-19 pandemic.
Johan’s disposal of DCS and DPPL is a major milestone as it wants to reinvest the money and focus its resources in new businesses which will provide recurring profit.
“This exit is timely as the group had recently obtained shareholders’ approval to venture into the manufacture, sale and distribution of gloves business via its 60%-owned subsidiary, Dynacare Sdn Bhd,” Johan said.
The shareholders had approved an investment of about RM624.1 million to develop Dynacare’s glove manufacturing plant on a 17-acre (6.88ha) industrial land in Lumut, Perak.
Dynacare’s plant will have a total of 42 double-former glove-dipping lines with a production capacity of 12 billion pieces of examination and surgical gloves per annum.
Commercial production is expected to commence in August 2021, with a total of six production lines to be fully operational by December 2021, subject to the continuing lockdown due to Covid-19.
The remaining 36 production lines will be commissioned and operationalised in stages in 2022 and mid-2023.
“This large production capacity will provide economies of scale, thus, ensuring competitiveness in the marketplace. The production capacity of 12 billion gloves will make the group one of the top seven glove manufacturers in the country,” Johan stated.
Johan chairman Tan Sri Tan Kay Hock who also controls George Kent (M) Bhd was delighted with the completion of the divestment and looks forward to the potential of the glove business to the group.Tan said Johan will continue to search for opportunities to further diversify the group income base.