Fabchem China : Entry Into Placement Agreement In Connection With The Proposed Placement

 

 

Fabchem China has announced a $25 million reverse takeover (RTO) of Lincotrade & Associates, a Singapore-based provider of interior design, renovation, carpentry and joinery services.

 

The company, on April 22, entered into a sale and purchase agreement (SPA) with Tan Jit Meng, Soh Loong Chow Jackie and Tan Chee Khoon (known collectively as vendors), where it will acquire all the shares in Lincotrade & Associates for a consideration of $25.0 million.

 

Tan Jit Meng, Soh and Tan Chee Khoon are the directors of Lincotrade & Associates and own 40%, 40% and 20% of shares in Lincotrade respectively.

 

The purchase consideration will be paid via the allotment and issuance of 113.6 million new ordinary shares in Fabchem China at an issue price of 22 cents apiece.

 

The issue price represents a discount of 41.3% to the last transacted share price of 37.5 cents and a discount of 41.5% to the volume weighted average price (VWAP) of 37.6 cents on April 13.

 

Fabchem will also allot and issue 5.68 million new shares at 22 cents each to Prestige Fame, an unrelated third-party, and up to 454,545 new shares to an unnamed sponsor, in part-payment for the sponsor&rsquo s professional fees.

 

In connection with the RTO, Fabchem China will seek to transfer the listing and quotation of its shares to the Catalist board of the SGX-ST from the Mainboard.

Following the allotment of shares, the vendors will hold a collective stake of 68.22% of the enlarged issue share capital of Fabchem China. The completion will also result in the transfer of controlling interest in the company.

 

According to the SGX filing put out by Famchem China, Lincotrade & Associates is a private company limited by shares and incorporated on Nov 14, 1991, in Singapore.

 

It has an issued and fully paid-up capital of $1.5 million comprising 1.5 million ordinary shares.

 

For the FY2020 ended June, Lincotrade & Associates recorded a loss of $2.0 million. It has also reported earnings of $1.6 million in its unaudited 1HFY2021 financial statement.

 

According to Fabchem China, it says the proposed acquisition and proposed transfer presents an opportunity for it to acquire a new operating business to meet the SGX-ST&rsquo s requirements of a new listing on the Catalist board, allowing it to maintain its listing status.

 

Upon completion, Lincotrade & Associates will become Fabchem China&rsquo s wholly-owned subsidiary.

 

The Company has, on 19 March 2021, entered into a sale and purchase agreement (&ldquo SPA&rdquo ) with its controlling shareholder, Triple Vision Pte. Ltd. (Company Registration No. 201812334H) (&ldquo Triple Vision&rdquo ), pursuant to which the Company has agreed to dispose, in exchange for payment of S$18 million in cash by Triple Vision (&ldquo Disposal Consideration&rdquo ), of the Company&rsquo s ownership of the aggregate RMB 156 million registered capital of Shandong Yinguang Technology Co. Ltd. ( 山 东 银 光 科 技 有 限 公 司 ) (Unified Social Credit Code: 9137130076870702XE), a company incorporated in the People&rsquo s Republic of China (&ldquo PRC&rdquo ), with its registered office at No. 1 Huagong Road, Fei County, Linyi City, Shandong Province, PRC (&ldquo Yinguang Technology&rdquo ), representing 100% of the entire fully-paid registered capital of Yinguang Technology (&ldquo Sale Shares&rdquo ), to Triple Vision (&ldquo Proposed Disposal&rdquo ), and

 

Subsequent to the Proposed Disposal, the Company intends to undertake a capital reduction exercise (&ldquo Proposed Capital Reduction&rdquo ) pursuant to Section 78A read with 78C of the Companies Act (Cap 50) of Singapore (&ldquo Act&rdquo ), for a cash distribution, pro-rata, to all shareholders of the Company (&ldquo Shareholders&rdquo ) of S$0.368 for each ordinary share in the equity capital of the Company (&ldquo Share&rdquo ) held by Shareholders as at a books closure date after the EGM (as defined below), to be determined by the Directors in their sole and absolute discretion for the purpose of determining the entitlement of the Shareholders to the cash distribution pursuant to the Proposed Capital Reduction (&ldquo BCD&rdquo ).

 

FABCHEM China has on Monday entered into a non-binding term sheet for the acquisition of Australian power plant operator Renewable Power Management. This will result in a reverse takeover should the acquisition go through.

 

The company said in a regulatory filing that the term sheet was inked with Valiant Investments, GCAP Australia Investments and Gazelle Capital to acquire not less than 71.26 per cent of the shares in the entire issued and paid-up share capital of Renewable Power Management for at least S$22 million, or S$30 million if 100 per cent of the stake is acquired.

 

Valiant Investments, GCAP Australia Investments and Gazelle Capital are investment holding companies representing the majority investors that acquired Renewable Power Management in 2012.

 

The acquisition consideration will be satisfied in full by the issue and allotment of new ordinary shares in the equity capital of Fabchem to the three vendors in proportion to their existing shareholding interests in Renewable Power Management.

 

Mainboard-listed Fabchem said the acquisition represents a good opportunity for it to expand and diversify its businesses and operations, with a view to achieving more consistent and sustainable financial growth.

 

Fabchem manufactures initiation systems, and is the largest boosters and detonating cords producer within a supply regulated industry in China.

 

Renewable Power Management owns and operates a biomass cogeneration power plant in Queensland. The company, incorporated in 1986, has a rated capacity of 30 MW and is accredited with the Australian Clean Energy Regulator, the statement from Fabchem said.

 

Renewable Power Management is solely in the business of power generation and the sales of electricity and carbon emission certificates. Its revenue stream comprises sale of electricity to the national grid, sale of Large-Scale Generation Certificates and sale of electricity and steam to the sugar mill from which the biomass plant receives part of its supply of feedstock in the form of sugar cane fibres or bagasse.

 

The proposed acquisition is subject to approval of the Singapore Exchange and shareholders at an extraordinary general meeting where Fabchem will be seeking the waiver from the requirement of a mandatory takeover offer by the vendors.

 

Also, Fabchem will seek to transfer the listing and quotation of its shares from the main board to the Catalist board of the bourse, subject to the required approvals. In connection with the move, it will appoint a Catalist sponsor.

 

What is noteworthy is arranger fees of S$2 million in total - a not insignificant amount - which will be payable to two arrangers, with the payment to be fully satisfied through the issue and allotment of new ordinary shares in the equity capital of the Fabchem.

 

Fabchem is valued at S$10 million subsequent to a proposed interested person transaction to sell a subsidiary for S$15 million and S$20 million.

 

The arrangers are not existing shareholders and are unrelated to the vendors and Renewable Power Management, said Fabchem.

 

The watch-listed Fabchem had asked for trading halt to be lifted after markets closed on Monday, and the counter was trading flat at S$ 0.15 when the request to suspend trading was made on Oct 9.