Everest Kanto Cylinder Limited has informed the Exchange about General Updates regarding EKC Europe Zrt., a Hungarian Joint Venture of EKC International FZE, the wholly owned subsidiary of the Company.
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Everest Kanto Cylinder's wholly owned Dubai subsidiary, EKC International FZE, has decided not to pursue a planned manufacturing facility for seamless high pressure gas cylinders in Hungary due to the geopolitical situation in the region. To exit the Hungary project and consolidate losses, EKC FZE has signed a Share Purchase Agreement to sell its 80% stake in the Hungarian JV, EKC Europe Zrt., to its existing JV partner, the Rév Group, for a total consideration of EUR 96,000. The deal will also involve a reduction in the share capital of the JV entity to absorb accumulated losses. Post-completion, the JV's name will be changed to drop the 'EKC' branding. The transaction is subject to approvals from Hungarian authorities.
This is a strategic withdrawal from a loss-making overseas project rather than an expansion, so it should help the company cut future cash outflows and remove a drag on consolidated financials. However, the symbolic sale price of just EUR 96,000 for an 80% stake signals the venture had little residual value, and shareholders should view this as the company acknowledging and cleaning up a failed overseas bet rather than a value-accretive move.