SYDNEY, AUSTRALIA: SECOS Group Limited (ASX: SES), a leading developer and manufacturer of sustainable packaging materials, has announced that it has entered into an asset sale agreement to divest its traditional plastic manufacturing assets to Advent Packaging Sdn Bhd, a Malaysian packaging manufacturer. The deal is expected to be completed by 1 December 2023.
The sale of the traditional plastic assets, which are held in SECOS’ subsidiary Stellar Films (Malaysia) Sdn Bhd, will allow SECOS to focus solely on the sale and development of sustainable resins and finished products under its MyEcoWorld TM brand. The expected net funds of AUD$1.7 million from the asset sale will be re-invested to support the expansion of the company’s compostable range of products.
The move will also strengthen SECOS as a leader in sustainable packaging and will see sustainable product sales become 100% of the group’s sales mix, compared to its current mix of 35% traditional plastic and 65% compostable products. The company has been progressively reducing its focus on production of lower margin traditional plastic products, which have declined in demand and profitability due to the market’s shift towards greener alternatives.
As part of the transaction, SECOS has also entered into an exclusive manufacturing supply agreement with Advent for the supply of MyEcoWorld TM compostable pallet wrap and bio-packaging films. Advent will manufacture SECOS’ MyEcoWorld TM compostable cast films using SECOS’ proprietary compostable resins. The partnership will enable SECOS to leverage Advent’s production capacity and distribution network to access new markets and customers.
SECOS’ CEO, Mr. Richard Tegoni, said: “The divestment of SECOS traditional plastic business aligns with the company’s strategy of being the leader in sustainable packaging. It allows the company to focus operations on compostable resin manufacture and development, with a growing range of finished products produced via a combination of outsourcing and in-house manufacturing. Our strong retail brand, MyEcoWorld TM positions us well to source highly competitive large volume orders from major retailers globally.”