KUALA LUMPUR (Dec 12): Pasdec Holdings Bhd is selling its entire stake in a South African associate company at a loss to settle a debt it owes a business partner, release it from a corporate guarantee, and to streamline its operations and realign focus on its Malaysian property business.

It is selling CRH Africa Automotive Proprietary Ltd for 60 million South African rand (equivalent to RM18 million) to South Africa-based P Pather Capital Proprietary Ltd (PPC or the buyer), which would result in a loss of RM440,000 to the group, according to the group's stock exchange filing today.

The stake in CRH is held under Pasdec Automotive Technologies (Proprietary) Ltd (PAT), which has a 30.87% stake in CRH. PAT is in turn 70%-owned by Pasdec's 97%-owned Pasdec Resources SA Ltd, with the remainder 30% held by the buyer, PPC. The shareholding structure gives Pasdec an effective stake of 20.96% in CRH.

Pasdec said the proposed disposal represents an opportunity for it to monetise its investment in CRH, which is primarily engaged in the manufacturing of seat components and catalytic converters for the automotive industry and operates principally in South Africa.  

Of the proceeds, it plans to advance 32 million South African rand (equivalent to RM9.6 million) to PAT to repay bank borrowings and release Pasdec from a corporate guarantee it issued in favour of PAT, and pay PPC 8 million South African rand (RM2.4 million) to settle a debt owed. The remainder 20 million South African rand (RM6 million) will be used as Pasdec's working capital.

Pasdec expects the disposal to be completed by the first quarter of next year.

Its shares slid 1.5 sen or 4.17% to 34.5 sen, giving it a market capitalisation of RM138.13 million. In the past 12 months, Pasdec's shares have fallen nearly 41%.