Pan-United Corp sells its Tug and Barge business for $29.9m

It incurred a net loss of $4.1m in 1H16.

As the shipping industry tread on a very challenging environment, Pan-United Corp decided to enter into a sale and purchase agreement with Sedgefield Corporation Pte. Ltd to divest its entire equity stakes in two wholly-owned subsidiaries, including Pan-United Shipping Pte Ltd. (PUS) and P.U. Vision Pte Ltd. (PUV).

The two subsidiaries, which make up the group's Tug and Barge Business, is sold for a cash consideration of $29.9 million.

In a statement, the group said the shipping industry has been faced with numerous headwinds in recent years, characterised by an oversupply in vessel capacity and lacklustre demand.

"These negative factors have resulted in a severe erosion of freight rates. As a result, the Tug and Barge Business has been incurring losses since 2013, and most recently recorded an aggregate net loss of S$4.1 million for the half-year ended 30 June 2016," the group noted.

Pan-United believes this divestment will enable it to stem its losses arising from the Tug and Barge Business and improve its financial position as a whole.

"The proposed transaction would allow the Group to better focus on its Concrete & Cement and Port businesses, which have been the key drivers behind the group's growth over the past few years," Pan-United said.