Halcyon Agri -
CURRENT PRICE: SGD0.750
Acquisition of JFL Group and Proposed Share Placement
■ Acquisition of JFL Group. Halcyon Agri Corporation (HAC) has entered into a conditional share sale and purchase agreement to acquire JFL Agro Pte. Ltd. and its subsidiaries (JFL Group) for about SGD56.1 mln.
The deal is expected to be completed by end-2013.
■ Loss-making but valuable assets
JFL Group made a loss before tax of SGD0.55 mln in FY13 (Mar) as it has yet to generate any operating revenue. However, its key assets are a 24,327.3 acres of 99-year leasehold Sultanate land (cultivable acreage of 17,652.8 acres and non-cultivable acreage of 6,674.5 acres) in Kelantan, Malaysia and planted palm trees covering about 300 hectares of the cultivable land (to be completed by Dec. 31, 2013).
HAC intends to develop a natural rubber plantation on the cultivable land and this should allow it to become an integrated natural rubber producer in the longer term.
■ Payment by cash and new shares
The purchase consideration will be satisfied by SGD37.4 mln cash and issuance of 26 mln new HAC shares to the vendors at SGD0.72/share (at a discount of about 4.01% to the weighted average price of SGD0.7501/share on Nov. 1, 2013).
■ Proposed placement
HAC also plans to issue 40 mln new shares to Credence Capital Fund II and other private investors at an issue price of SGD0.72/share. The gross proceeds of SGD28.8 mln is solely for strategic purposes, such as acquisitions and investments.
Management believes that the placement will help to fund HAC’s future growth and expansion of business. Assuming the placement and issuance of new shares to vendors of JFL Group are completed, HAC’s outstanding shares will increase by 20.0% to 396 mln shares.
Publish date: 07/11/13