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LIONGOLD CORP LTD. (the “Company”) Incorporated in Bermuda Company Registration Number 35500 PROPOSED DISPOSAL OF PART OF THE ISSUED AND PAID UP SHARE CAPITAL OF INDUSTRIAL POWER TECHNOLOGY PTE LTD, THE ENTIRE ISSUED AND PAID UP SHARE CAPITAL OF THE THINK ENVIRONMENTAL CO SDN BHD AND THE PROPERTY LOCATED AT 38 KALLANG PLACE SINGAPORE (“PROPOSED DISPOSAL”) 1. INTRODUCTION The Board of Directors (the “Board”) of the Company refers to the announcement on 10 September 2012 regarding the proposed divestment of shares of Industrial Power Technology Pte Ltd. Further thereto, the Board wishes to announce that the Company and its wholly owned subsidiary Think Power Pte Ltd (the “Vendor”) had on 28 September 2012 entered into a sale and purchase agreement (the “Agreement”) with Annica Holdings Ltd (the “Purchaser”) (hereinafter the Company and the Purchaser are referred to as the “Parties” and each a “Party”) to the proposed disposal of: (a) 4,861,500 shares representing 60% of the entire issued share capital of Industrial Power Technology Pte Ltd (the “IPT”) owned by the Vendor (the “Sale Shares”); (b) 100,000 shares, comprising 100% of the entire issue share capital of The Think Environmental Co Sdn Bhd (the “TTEC”) owned by the Company (the “TTEC Shares”); and (c) A single storey terrace factory located at 38 Kallang Place, Singapore 339166 (the “Property”) owned by the Vendor, in accordance with the terms and conditions of the Agreement. The Company will also guarantee the performance of the Vendor’s obligations under the Agreement on the terms and subject to the conditions contained in the Agreement. 2. PROPOSED DISPOSAL AND THE SALIENT TERMS THEREOF 2.1 Information about IPT and TTEC IPT IPT is a company incorporated in Singapore on 24 August 1991 with its registered office at 38 Kallang Place Singapore 339166. IPT has as at the date of the Agreement an issued and paid-up share capital of S$9,600,000 comprising 8,102,500 ordinary shares, of which 25% is owned IPT Pte Ltd and 75% owned by the Vendor. 1 IPT in turn owns (i) 18% of the entire equity interests in Industrial Power Technology (Thailand) Co., Ltd. and (ii) 49% of the entire equity interests in Industrial Power (Thailand) Co,. Ltd. TTEC TTEC is a company incorporated in Malaysia on 23 June 2008 with its registered office at No. 177-3, Floor 3, Jalan Sarjana, Taman Connaught, Cheras, 56000 Kuala Lumpur, Malaysia. TTEC has as at the date of the Agreement an issued and paid-up share capital of approximately RM100,000 comprising 100,000 shares. The Property The Property is a single terrace factory situated at 38 Kallang Place, Singapore 339166. It is leased from JTC Corporation for a period of 60 years from 20 June 1981 and has a land area of 1,034.4 square metres. 2.2 Principal Businesses of the Subsidiaries to be Disposed IPT and its subsidiaries The principal businesses of the IPT are (i) the manufacture and repair of heating boilers, radiators and correctors and (ii) power plant & building construction & engineering services. Industrial Power Technology (Thailand) Co., Ltd. carries on the business of construction of electric power plant. Industrial Power (Thailand) Co,. Ltd. carries on the business of construction of power plant. TTEC The principal business of the TTEC Specialist is that of a engineering, procurement and construction contractor for bio-mass power generation projects. 2.3 Disposal Consideration (a) Pursuant to the Agreement, the aggregate cash consideration for the Proposed Disposal is S$12,500,001 (the “Aggregate Consideration”) and shall be payable on the date of Completion (defined below). The Aggregate Consideration consists of S$10,000,000 for the Sale Shares, S$2,500,000 for the Property and a nominal fee of S$1.00 for the TTEC Shares. (b) Each of the cash consideration amounts for the Sale Shares, Property and TTEC Shares were determined on a willing-buyer, willing-seller basis and takes into account the following: (i) in relation to the Sale Shares, the net liability value of the Sale Shares as at its financial year end of 31 March 2012, being S$2,021,196 and the business valuation report on IPT as commissioned by the Purchaser and prepared by AV Capital and dated 12 September 2012. Based on the said valuation report, the fair market value 2 of IPT for a 100% shareholding stake is in the range of S$12.67 million to $18.39 million as computed under the discounted cashflow method; (ii) in relation to the Property, the valuation report on the Property commissioned by the Purchaser and prepared by Dennis Wee Realty Pte Ltd and dated 14 September 2012. Based on the said valuation, the open market value of the Property, with vacant possession and free from encumbrances is S$2,600,000; and (iii) in relation to the TTEC Shares, the nominal consideration takes into account the negative net asset value of TTEC Shares as at its financial year end of 31 March 2012, being S$425,131 (RM1,035,125 @ 0.410705). 3. RATIONALE FOR PROPOSED DISPOSAL The Proposed Disposal is in line with the Company’s business strategy and on-going efforts to divest of its non-core assets and to focus on its gold business. 4. SALIENT TERMS OF THE PROPOSED DISPOSAL 4.1 The completion of the Proposed Disposal (“Completion”) is conditional upon the fulfillment (or waiver) of, inter alia, the following conditions: (a) the Purchaser having undertaken and completed its due diligence investigations in respect of the Industrial Power (and the companies under which it has shares in) and TTEC and is satisfied with the results of such due diligence in its sole and absolute discretion; (b) the Purchaser, the Vendor and IPT Pte Ltd, entering into a shareholders agreement to regulate their rights as shareholders of IPT; (c) the consent of the relevant bank to the sale and purchase of the Sale Shares; (d) the consent of JTC to the sale and purchase of the Property. 4.2 Completion of the Proposed Disposal shall take place on the date falling 5 business days after the date on which all the conditions precedent have been fulfilled or waived in writing. The long-stop date for the proposed Acquisitions is 27 February 2013. 4.3 The Company and the Vendor have provided the customary representations and warranties to the Purchaser in respect of the Sale Shares, the TTEC Shares and the Property. 5. CHAPTER 10 OF THE LISTING MANUAL 5.1 The Proposed Disposal as a Disclosable Transaction (a) The Aggregate Consideration amounts to S$12,500,001. (b) Based on the unaudited financial statements of the Group for the first quarter ended 30 June 2012 announced on 14 August 2012, the relative figures of the Proposed Disposal 3 computed on the bases set out in Rule 1006(a) to (d) of the Listing Manual of the SGX-ST are as follows: Rule 1006 (a) (b) (c) (d) Bases Net asset value of the shares to be disposed of, 1 compared with the Group’s net asset value Net profits/loss before tax and minority interest attributable to the shares to be disposed of, 2 compared with the Group’s net profits Aggregate value of the consideration to be received, compared with the Company’s market capitalisation on 27 September 2012, being the 3 market day preceding the date of the Agreement Number of equity securities issued by the Company as consideration for an acquisition, compared with the number of equity securities previously in issue Relative Figures (0.88)% (4.50)% 1.19% Not Applicable Notes: (c) 6. 1. The unaudited net asset value of IPT, TTEC and the Company for the three months ended 30 June 2012 was (S$567,029), (S$432,319) and S$113,282,128. 2. The unaudited net profit of IPT, TTEC and the Company for the three months ended 30 June 2012 was S$342,509, (S$19,263) and (S$7,178,835). 3. The aggregate value of the consideration given for the disposal of IPT, TTEC and the single terrace factory is S$12,500,001. The Company's market capitalization was S$1,047,369,069 based on the weighted average price of S$1.2045 of the Company's shares on 27 September 2012. The Company has 869,546,757 shares in issue. As the Proposed Disposal falls within certain of the relevant thresholds under Chapter 10 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the Proposed Disposal constitutes a “Disclosable Transaction” which is subject to the disclosure requirements of the Listing Manual. FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL For illustration purposes only, the financial effects of the Proposed Disposal on the Group set out below were prepared based on the unaudited financial statements of the Group for the first quarter ended 30 June 2012 announced on 14 August 2012 and subject to the following key assumptions: 4 (a) for the purpose of computing the earnings and EPS of the Company after the Proposed Disposal, it is assumed that the Proposed Disposal was effected on 30 June 2012; (b) for the purpose of calculating the NTA, NTA per Share and gearing of the Group after the Proposed Disposal, it is assumed that the Proposed Disposal were effected on 30 June 2012; Shareholders should note that the illustrative financial effects of the Proposed Disposal on the Group are for illustration purposes only. The illustrative financial effects should not be construed as to mean that the Group’s actual results, performance or achievements will be as expected, expressed or implied in such financial effects. 6.1 Share capital As at the date of Latest Practicable Date, the entire issued and paid up share capital of the Company is S$225,949,873 comprising 869,546,757 Shares. The Proposed Disposal will have no impact on the issued and paid-up share capital of the Company. 6.2 NTA and NTA per Share The pro forma financial effects of the Proposed Disposal on the NTA of the Company as at 30 June 2012 are as follows:Before adjusting for the Proposed Disposal After adjusting for the Proposed Disposal NTA (S$) 61,477,445 58,231,527 Weighted average number of shares 869,546,757 869,546,757 NTA per share (S$ cents) 7.07 6.70 1 Note: 1. The figure is derived by adding the net tangible assets of the Company of S$61,477,445, net liability of IPT and TTEC of S$567,029 and S$432,319 respectively, and cash received of $12,500,001 for the consideration minus goodwill written off of S$10,178,019, net debt waived by the Company to IPT and TTEC of S$4,269,381 and S$533,543 respectively, net book value of the property of S$1,259,026 and non-controlling interest of S$505,299. 6.3 EPS The pro forma financial effects of the Proposed Disposal on the earnings per share of the Company as at 30 June 2012 are as follows:Before the Proposed 5 After the Proposed Disposal Disposal Net profit after tax (S$) (5,139,802) (8,385,720) Weighted average number of shares 869,546,757 869,546,757 Earnings per Share (S$ cents) (0.59) (0.96) 1 Note: 1. The figure is derived by adding the loss after tax of S$5,139,802, gain on disposal of the property of S$1,240,974 and loss on disposal for IPT and TTEC of S$4,385,670 and S$101,222 respectively, and divided by the number of shares in issue for the Company of 869,546,757. 6.4 Net gearing The pro forma financial effects of the Proposed Disposal on the gearing of the Company as at 30 June 2012 are as follows: Before the Proposed Disposal After the Proposed Disposal Total Debt (S$) 66,146,315 53,646,314 Total Equity (S$) 113,282,128 110,036,210 Debt to Equity Ratio 58.39% 47.36% 1 2 Notes: 1. Net debts is derived by adding total liabilities of S$86,140,181 less income tax of S$18,096, cash and cash equivalents of S$19,975,769 and consideration of S$12,500,001. 2. The figure is derived by adding the total equity of the Company, S$113,282,128 minus the loss on disposal of S$3,245,918 from IPT, TTEC and the property. 7. BOOK VALUE AND EXCESS/DEFICIT OF PROCEEDS OF PROPOSED DISPOSAL OVER BOOK VALUE IPT Based on the above-said valuation report, the fair market value of IPT for a 100% shareholding stake is in the range of S$12.67 million to S$18.39 million as computed under the discounted cashflow method. 6 The net assets value of IPT is S$(1,260,064) as at 30 June 2012. The net assets value of IPT based on 60% shareholding stake is S$(567,029). There will be a loss of S$4,385,670 on the disposal of IPT at the Group level. TTEC The negative net asset value of TTEC Shares is S$432,319 as at 30 June 2012. There will be a loss of S$101,222 on the disposal of TTEC at the Group level. The Property Based on the above-said valuation, the open market value of the Property, with vacant possession and free from encumbrances is S$2,600,000. The net assets value of Property is S$1,259,026 as at 30 June 2012. There will be a gain of S$1,240,974 recognized on the disposal of the property at the Group level. 8. USE OF PROCEEDS The Aggregate Consideration is S$12,500,001 and after deducting related expenses of the Proposed Disposal amounting to approximately S$100,000, the net proceeds arising from the Proposed Disposal is S$12,400,001 (“Net Proceeds”). The Board intends to use the Net Proceeds to meet the general working capital needs of the Group. 9. INTEREST OF DIRECTORS AND CONTROLLING SHAREHOLDERS None of the Directors or controlling shareholders of the Company has any interest, direct or indirect, in the Proposed Disposal, other than through their respective shareholdings in the Company. 10. RESPONSIBILITY STATEMENT The Directors collectively and individually accept full responsibility for the accuracy of the information given in this announcement and confirm after making all reasonable enquiries that, to the best of their knowledge and belief, this announcement constitutes full and true disclosure of all material facts about the Proposed Disposal, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this announcement misleading. Where information in the announcement has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the announcement in its proper form and context. 7 11. DOCUMENTS AVAILABLE FOR INSPECTION The Agreement and the business valuation report on IPT prepared by AV Capital and dated 12 September 2012 will be made available for inspection during normal business hours at registered office of the Company for three (3) months from the date of this announcement. In respect of the valuation report on the Property prepared by Dennis Wee Realty Pte Ltd and dated 14 September 2012, the Company is currently procuring the same to be available for inspection at registered office of the Company. Further update in this regard will be provided by the Company in due course. 12. CAUTION IN TRADING Shareholders are advised to exercise caution in trading their shares. There is no certainty or assurance as at the date of this announcement that the Proposed Disposal will be completed or that no changes will be made to the terms thereof. The Company will make the necessary announcements when there are further developments on the Proposed Disposal and other matters contemplated by this announcement. Shareholders are advised to read this announcement and any further announcements by the Company carefully. Shareholders should consult their stock brokers, bank managers, solicitors or other professional advisors if they have any doubt about the actions they should take. For and on behalf of the Board of LionGold Corp Ltd. Tan Sri Dato’ Nik Ibrahim Kamil Executive Chairman 28 September 2012 8