United Engineers' subsidiary is selling off its automotive business

United Engineers Ltd (UE) has announced that its subsidiary, WBL Corporation, will be selling off its luxury automotive business to StarChase Motorsports (Singapore) for US$365 million (S$455 million). The sale was part of UE's plan to exit from non-core business operations, reported The Business Times.

WBL Corporation - a firm which included Wearnes Automotive in addition to other tech and property businesses - is 67.6 percent owned by UE. Wearnes Automotive imports and distributes luxury cars in South-East Asia, including makes like Bentley, Bugatti, McLaren, Jaguar, Land Rover, Infiniti, BMW and Volvo. Wearnes Automotive's business generated an operating profit of S$6.23 million in the first half of 2014 on revenues of S$446.84 million.

The business daily reported that the news of the sale comes as Oversea-Chinese Banking Corporation (OCBC) is in talks with a group linked to Thai billionaire Charoen Sirivadhanabhakdi to sell its stake in UE. OCBC, along with Great Eastern and OCBC's Lee family own around 36 percent of UE, according to the firm's most recent annual report. The business daily added that the purchase of more than 30 percent of the shares would trigger a mandatory takeover for the company.

At the end of June, UE had S$6.3 billion of assets including S$744 million of cash and S$2.7 billion of debt, a significant amount of which was incurred to fund its takeover of WBL Corporation last June. Although at that time UE had said that recurring earnings from Wearnes Automotive could smooth out its lumpy property earnings, by October last year, UE was reportedly looking to sell off its automotive business.