Steel products maker HG Metal Manufacturing on Tuesday said it would sell its 23 percent stake in steel mesh maker BRC Asia following an open letter by activist investment fund Quarz Capital.
HG Metal said it will hold an extraordinary general meeting on October 25 to seek shareholder approval for an asset sale and capital reduction exercise.
Shareholders of HG Metal will vote on proposed disposal of 42.1 million shares in BRC Asia shares held by the company for S$39 million. The company will pay out a cash distribution of 10.5 Singapore cents per share following the disposal.
Shareholders will also vote on the reduction of share capital of the company by S$81.6 million and to write off S$68.2 million of accumulated losses.
The move comes after activist fund Quarz Capital Management urged HG Metal to consider selling its stake in BRC Asia, arguing that the stake provided no value to HG Metal's operations.
Quarz said it "believes that multiple buyers are interested in building up substantial stakes in BRC Asia as evident by the unsolicited bid announced by the company recently", the fund said earlier this year.
Shares in HG Metal Manufacturing were unchanged at S$0.57 on the Singapore Exchange. The stock has gained 84 percent so far this year.