SECOS Group updates market on Malaysian property sale
Secos achieved a sale price of MYR 10.5 million (A$3.5 million) for the land and building. These proceeds will be used to reduce the company’s net debt of approximately A$1.3 million, with free cash of approximately A$2.2 million.
The Malaysian property is on a 99-year government freehold title, with the sale contract being subject to Malaysian government approval. The initial expected settlement date of November 2018 was therefore also subject to the timing of the approval process, which the company has now received.
SES’s Malaysian legal advisers have confirmed that the financial settlement and access to proceeds are now scheduled for 14 January 2019 or no later than 13 February 2019.
The small cap’s lawyers are now working with the buyer’s lawyers and its bank, CIMB, to discharge the collateral and sales proceeds in favour of SECOS.
The funds from the sale and leaseback will enable the company to accelerate its investment in resin manufacturing capacity to meet growing demand for its compostable bioplastic resins.
The company also recently completed a $2.1 million capital raising, consisting of a placement to sophisticated investors of $1.2 million and a Rights Issue to existing shareholders of $0.9 million. That funding will be used to provide cash flow for SES while it waits to receive the proceeds of the properly sale in early 2019.
In November, SES completed a strategic review into its wholly owned subsidiary Stellar Films Australia (SFA), the arm of the business which produces tradtional plastic films.
Through the review process, SES resolved to continue the transfer of SFA customers to its Malaysian operations and commence the cessation of its Australian film manufacturing operations — all to deliver some significant operating and overhead cost savings. Following these measures, the company is expecting its net profit after tax (NPAT) to improve by over $0.9 million a year.
Short-term positions in small, early stage ASX companies,
with high potential and near term price catalysts.
Focusing on resource exploration, early-stage tech, and biotech.
Exceptional opportunities across a broad range of
early-stage growth sectors with strong management.
Seeking 1,000% plus returns across medium to long-term holds.
Longer-term positions in a variety of sectors.
Seeking strong management where traction is established and have entered into a growth phase.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.