Enviro-Hub to fully acquires glove making subsidiary Pastel Gloves

SINGAPORE / KUALA LUMPUR, MALAYSIA – Media OutReach – 21 May 2021 – Enviro-Hub Holdings Ltd (SGX:L23) has
announced the proposed acquisition of the remaining 75 per cent share capital
of its 25 per cent associated company, Pastel Glove Sdn. Bhd. from existing
shareholders (“PGSB” or the “Target“)
for a total consideration of S$46.8 million, payable 50 per cent in cash and 50
per cent in new shares in the Company. The Proposed Acquisition shall be
subject to, inter alia, the Company and the vendors enter into definitive
agreements on terms to be agreed.

Under the term sheet, Enviro-Hub will pay cash
consideration of S$23.4 million, and further issue 292,500,000 new shares at a
pre-determined issue price of S$0.08 per share for a total subscription price of
S$23.4 million. Of the total S$23.4 million cash consideration, 25 per cent
(S$5.85 million) will be paid on the completion of the deal and the remaining
S$17.55 million will be paid on a staggered basis upon the Target’s achievement
of performance guarantee of US$18 million over the period of fiscal years 2021-2023.
There will be a one-year moratorium for all the 292,500,000 consideration shares
issued during which the consideration shares may not be sold or transferred.

PGSB, which is based in Malaysia, is primarily
involved in the manufacture and trading of rubber gloves. Enviro-Hub had made
an initial investment in PGSB in January 2021 by way of a subscription of an initial
25 per cent equity stake in the Target for approximately US$0.125 million in
equity and the grant of a US$4.875 million interest-free shareholders’ loan to
PGSB.

As previously announced by the Company on 16 March
2021, in February this year, PGSB had installed and commissioned its first
automated glove-dipping line. A total of six production lines with an expected
production capacity of 1.42 billion gloves per annum are expected to be operational
by September 2021.

Following the acquisition, the founders of PGSB, Mr.
Law Siau Woei, and Mr. Choo Kuan Ping, will remain in charge. The founders have
over 20 years of experience in the gloves manufacturing industry. Prior to setting
up PGSB, Mr. Law and Mr. Choo were involved in the glove supply business as
traders, with a network of global multinational customers. Once the deal is
completed, Mr. Law will be substantial shareholder in Enviro-Hub, thus aligning
his interest strongly with shareholders of EHH.

“The COVID-19 pandemic has
resulted in an unprecedented increase in the demand for gloves and Personal
Protective Equipment (PPE), due to the increasing usage of gloves to protect
healthcare professionals, and the heightened hygiene standards at Food and Beverages
(F&B) establishments, hospitality, and travel sectors. The recent
resurgence in global COVID-19 cases and supply shortage in the US will continue
to support elevated average selling prices (ASPs) for gloves, which bodes well
for glove makers,” Adrian Toh, Enviro-Hub’s Chief Investment Officer (“CIO”)
said.

According to Hong Leong Investment Bank^[1],
demand for rubber gloves is expected to remain elevated with their increased
usage in vaccination programmes around the world more than offsetting the decline
in gloves used for testing. This will help to keep ASPs high as there remains a
supply shortage of gloves of about 12.4 billion for 2021 despite new entrants
and industry players ramping up production capacities. Hong Leong Investment
Bank estimates that global herd immunity could take as long as 5 years, and
this could provide support for glove demand in the medium term.

“Once the deal is completed,
the Group will have absolute control of the lucrative glove operation of PGSB which
will not only generate a strong bottom-line but also positive cash flow. The
cash flow will help the Group expand its new healthcare products business line.
The management team from PGSB has a wealth of experience in the PPE business
and they are committed to growing the healthcare products business division in
Enviro-Hub rather than just focusing on PGSB. Their know-how in sophisticated
clean room and medical gloves set-up will aid our expansion efforts by way of
acquisition and/or organic growth in our healthcare products business line,”
Executive Chairman of Enviro-Hub, Mr. Raymond Ng (“Mr. Ng”) said.

The Executive Chairman noted that the proposed PGSB
acquisition is in line with Enviro-Hub’s strategy of pivoting its business
towards healthcare products supply and trading, and recycling & refining
E-waste/metals to provide additional and recurring revenue streams for the
Group. “Going forward our focus will be on, PPE
products such as latex and nitrile gloves for medical and industrial use. We
will also focus on medicine, medical consumables, and other healthcare-related
products,” Mr. Ng said.

On 18 May 2021, the Company had also announced that
its 51 per cent indirectly owned subsidiary, QF 4 Pte. Ltd. had, on 14 May 2021,
granted an option to purchase to Extra Space Hillview Pte. Ltd., for Extra
Space Hillview Pte. Ltd to purchase its property units at Lam Soon Industrial Building
at a consideration of approximately S$35.3 million. Please refer to the
Company’s announcement dated 18 May 2021 for further information on the grant
of the said option to purchase.

Note to media: Please read
this press release in conjunction with the Company’s announcement released on SGXNet.