HG Metal Investments (HGMI), a wholly-owned subsidiary of HG Metal Manufacturing BTG , has disposed of its entire stake in its subsidiary First Fortune International Company for $2.4 million.
On Feb 13, HG Metal announced that HGMI had entered and completed a sale and purchase agreement for its shareholding of 51.04% or 30,486 ordinary shares in First Fortune with Aung Tin Htut, a citizen of Myanmar.
First Fortune was an indirect subsidy of HG Metal established in Myanmar in 2019. Prior to its cessation of operations in February, the subsidiary had primarily operated a one-stop steel fabrication factory in Yangon, Myanmar.
The subsidiary was a joint venture among HG Metal, Fortune Peak Investments, Hanwa Co. and YNJ Engineering, all of which will also be disposing of their shares in First Fortune to Aung Tin Htut.
Prior to the disposal, the total paid-up capital of First Fortune was US$5,973,000 ($8,035,208), comprising 59,730 ordinary shares, of which 30,486 ordinary shares or 51.04% of the total issued share capital was held by HGMI.
First Fortune recorded a net loss of $10.7 million in FY2022 after recognising an impairment loss of $9.8 million on its assets due to the adverse political situation and difficult operating environment in Myanmar.
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In February last year, HG Metal announced its plan to cease First Fotune’s business operations in Myanmar in consideration of the unlikely improvement of economic conditions in the near future.
Based on the consideration of $2.4 million and taking into account that an amount of approximately $0.9 million will be additionally incurred by HG Metal toward the full release and discharge of the liabilities owing to the First Fortune’s external lender, the disposal would result in a loss on disposal of $0.8 million, representing 25.8% of the net loss attributable to its 1HFY2023 financial results.
Shares in HG Metal closed unchanged at 26 cents on Feb 13.
