Spicers Limited, the leading paper merchant and supplier of hardware, software and consumables to the wide format, signage and display industry, has sold its Asian paper businesses to global giant Japan Pulp & Paper company (JPP) for SGD 15 million ($A15.2m).
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| Spicers' product portfolio |
The deal also provides for Spicers to receive proceeds from the planned sale of the Singapore property owned by Spicers Paper (Singapore), and allows Spicers, formerly Paperlinx, to retain ‘net cash’ balances in the Asian operations - expected to be about SGD 7m. If it’s approved, the sale is expected to be completed towards the end of the first half of FY2019.
In a statement to the ASX, Spicers said: It is currently expected that Spicers will book a small loss on sale of $0.2m, inclusive of a gain from revaluation of the Singapore property to a market valuation, against the carrying value of the net assets of the Asian operations upon completion of the transaction.
The foreign currency translation reserve in Spicers consolidated accounts also includes an estimated loss of $16.1m relating to the Asian operations. This non-cash item will be written off on completion of the transaction, with no net impact on Spicers net assets/shareholders equity.
Moving forward, Spicers will focus exclusively on its Australian and New Zealand businesses, seeking to optimise their profit returns and free cash flows via a combination of strong market engagement, a sharp focus on cost control, and effective working capital management.
Completion of the sale of the Asian operations will release substantial funds for Spicers, via a combination of sale proceeds, return of net cash balances and the eventual sale of the Singapore property. The Board will review options on the utilisation of these funds, including some form of distribution to shareholders, and will update the market accordingly on any developments.
The Asian business - consisting of subsidiaries Spicers Paper (Malaysia) and Spicers Paper (Singapore), which also operates an office in Vietnam - contributed $2.2m to Spicers’s earnings in FY2018.
“I want to thank our team in Asia, for their ongoing focus and professionalism in effectively executing on their strategies and delivering strong results for the business,” said Spicers CEO David Martin. “I wish them well for an exciting future as part of JPP’s expanding Asian business upon completion of the transaction.
“The focus for our Australian and New Zealand businesses will be to continue to deliver on our promises. We have a strong business, with great people, and there are many opportunities for us to further optimise our positions and maximise returns in our chosen market segments.”
