Walcom Group Ltd Further re. disposal of Walcom Bio-Chem (Thailand)

 
TIDMWALG 
 
The information contained within this announcement is deemed by the Group to 
constitute inside information as stipulated under the Market Abuse Regulations 
(EU) No. 596/2014 ("MAR"). 
 
                                                                  20 March 2019 
 
                             WALCOM GROUP LIMITED 
                           ("Walcom" or "the Group") 
 
      Further re. disposal of Walcom Bio-Chem (Thailand) Company Limited 
 
Further to its announcement on 13 March 2019, Walcom announces that it has 
today entered into an agreement for the disposal of its entire interest in its 
55 per cent. owned subsidiary Walcom Bio-Chem (Thailand) Company Limited 
("Walcom Thailand"), to Mr Paitoon Buddhinunta-opas (the "Purchaser"), General 
Manager of, and 40 per cent. shareholder in, Walcom Thailand for a cash 
consideration of 16.5 million Thai Baht, (approximately HK$4.1m or GBP0.39m), 
(the "Disposal"). Certain amounts owed to the Purchaser will be repaid from the 
consideration for the Disposal such that the net proceeds to Walcom will be 
12.1 million Thai Baht, (approximately HK$3.0m or GBP0.29m). 
 
Walcom Thailand's operating business is focused on the trading of chemical 
animal feed additive products in Thailand. Following the Disposal, the 
Purchaser will own 95,000 shares in Walcom Thailand, representing 95 per cent. 
of Walcom Thailand's issued share capital, with the remaining 5,000 shares 
being held by minority shareholders. 
 
As previously announced, Walcom's working capital position has been severely 
constrained due to difficult trading conditions and defaults on payments from 
one of its major customers. The net proceeds of the Disposal will be used to 
ease the Group's working capital position in the short term and the Board 
expects that these net proceeds will enable the Group to meet its liabilities 
as they fall due until the middle of June 2019. The Group continues to closely 
monitor its working capital position and continues to consider all options 
available to it in order to mitigate its working capital position. 
 
In conjunction with the Disposal, the Group has entered into an agreement with 
Walcom Thailand, whereby Walcom Thailand has been appointed as the Group's 
exclusive partner in Thailand for the sale and distribution of Walcom's 
products (the "Distribution Agreement"). The Distribution Agreement will run 
for five years and renews automatically unless either party serves notice 
terminating the agreement. The Distribution Agreement includes an undertaking 
by Walcom Thailand to purchase a minimum of eighty tones of Walcom products 
every year, subject to review by both parties on an annual basis. All other 
terms of the Distribution Agreement mirror those in place between Walcom and 
Walcom Thailand prior to the Disposal. As a result of the Distribution 
Agreement, the Board expects Walcom Thailand will remain a significant trading 
partner of the Group, and will continue to contribute to the Group's revenues. 
 
In the year ended 31 December 2017, Walcom Thailand had audited revenues 
totalling HK$16.85m (c.GBP1.62m), and a profit of HK$0.89m (c.GBP86k). As at 31 
December 2017, Walcom Thailand had audited net assets of HK$6.5m (c.GBP620k). The 
Group reported in its unaudited interim results for the six months ended 30 
June 2018 that revenues for Walcom Thailand were HK$8.12m (c.GBP778k).  Following 
the Disposal, Walcom Thailand will no longer be a subsidiary of Walcom and its 
financial information will no longer be consolidated with that of the Group. 
As a result of the entering into of the Distribution Agreement, the future 
financial contribution of Walcom Thailand will be reflected in Walcom's 
financial reports on the same basis as other customers of the Group. 
 
The Purchaser is an existing director of Walcom Thailand. Both the Disposal and 
the entering into of the Distribution Agreement are deemed to constitute 
related party transactions under the AIM Rules for Companies. The directors of 
Walcom, having consulted with the Group's nominated adviser, Allenby Capital 
Limited, consider the terms of the Disposal and the Distribution Agreement to 
be fair and reasonable insofar as the Group's shareholders are concerned. 
 
Further enquiries: 
 
Walcom Group Limited                                  [phone] 
Francis Chi (Chief Executive Officer) 
Albert Wong (Chief Financial Officer) 
 
Allenby Capital Limited                               [phone] 
David Hart / Asha Chotai 
 
 
 
END 
 

(END) Dow Jones Newswires

March 20, 2019 04:26 ET (08:26 GMT)