KUALA LUMPUR (Feb 5): Careplus Group Bhd will sell 50% of its loss-making subsidiary to Ansell Services (Asia) Sdn Bhd for RM26.81 million cash as part of a joint venture deal between the two companies.

In a statement today, Careplus said Ansell is buying 14.55 million shares representing a 50% stake in Careplus’ wholly-owned unit Careplus (M) Sdn Bhd (CMSB) for RM26.81 million and that an agreement had been signed.

Careplus is expected to record a pro forma gain of approximately RM8.68 million from the proposed disposal. Of the proceeds, Careplus expects to use RM10 million for capital expenditure, and another RM6 million for working capital.

Another RM10.5 million will be re-invested into CMSB as the two JV partners have agreed to jointly subscribe for up to RM21 million worth of additional shares in CMSB in equal proportions on the completion date of the deal.

Additionally, Careplus said it agreed to grant Ansell options to buy Careplus’ remaining stake in CMSB, or to sell back its stake in CMSB to Careplus, pending certain criteria such as change in Careplus shareholding or the period of the joint venture.

CMSB is principally involved in the manufacture of rubber gloves and has been loss-making for the last four years — albeit with narrowing losses on the back of a growing topline arising from the commissioning of new production lines.

In the financial year ended Dec 31, 2019 (FY19), CMSB made a loss of RM1.85 million on the back of RM157.09 million in revenue, and had net assets of RM35.75 million.

Shares of Careplus gained 5 sen or 16.67% to close at 35 sen, which translates into a market capitalisation of RM185.98 million.