Download 1 THE PROPOSED DISPOSAL OF CIMELIA RESOURCE

THE PROPOSED DISPOSAL OF CIMELIA RESOURCE RECOVERY PTE. LTD. AS A
MAJOR TRANSACTION
1.
INTRODUCTION
The board of directors (“Board”) of Enviro-Hub Holdings Ltd. (“Company”) wishes to
announce that the Company had on 6 February 2013 entered into a conditional sale and
purchase agreement (“SPA”) to dispose of the Company’s entire shareholding interest (“Sale
Shares”) in Cimelia Resource Recovery Pte. Ltd. (“Cimelia”), a wholly-owned subsidiary of
the Company as at the date of this announcement, to Cerebra Integrated Technologies
Limited (“Purchaser”) for an aggregate consideration of US$20.0 million (approximately
S$24.6 million(A)) (“Purchase Price”) (“Proposed Disposal”). In this announcement, the
Company and its subsidiaries are collectively referred to as the “Group”.
As the relative figures computed under Rule 1006(b) and Rule 1006(c) of the listing manual
(“Listing Manual”) of the Singapore Exchange Securities Trading Limited (“SGX-ST”) exceed
20%, the Proposed Disposal is considered a major transaction under Chapter 10 of the
Listing Manual. Please see paragraph 2.7.2 below for further details on the computation of the
relative figures under Rule 1006 of the Listing Manual. Accordingly, the Proposed Disposal is
subject to the approval of the shareholders of the Company (“Shareholders”) at an
extraordinary general meeting (“EGM”) to be convened.
Upon completion of the Proposed Disposal, the Company will cease to hold any interest in
Cimelia and Cimelia will cease to be a subsidiary of the Company.
2.
THE PROPOSED DISPOSAL
2.1
Information on Cimelia
Cimelia is a private company limited by shares incorporated in Singapore on 27
February 2004 and having its registered office at 3 Tuas Avenue 2, Singapore
639443. As at the date of this announcement, Cimelia has an issued and paid-up
share capital of S$14,901,172 comprising 7,558,579 ordinary shares, entirely held by
the Company.
Cimelia is primarily involved in the business of electronic waste recycling and refining
of precious metals. Based on the unaudited accounts of Cimelia for the financial
period ended 30 September 2012, each of the net tangible asset value and book
value of Cimelia is approximately US$8.73 million (approximately S$10.74 million(A)(B)).
2.2
Information on the Purchaser
As at the date of the SPA and this announcement, the Purchaser is a public limited
company incorporated in India and listed on the Bombay Stock Exchange (“BSE”) in
India and is principally engaged in the business of providing complete information
technology solutions, comprising of legal process outsourcing, business process
outsourcing and knowledge process outsourcing services.
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The Purchaser and Cimelia had previously entered into a master services agreement
(“Master Services Agreement”) dated 19 March 2010, pursuant to which, inter alia,
the Purchaser had engaged Cimelia to assist in setting up an electronic waste
processing business in India and to provide technology and other support for the
setup of the business.
2.3
Rationale for the Proposed Disposal
The Company had on 1 October 2012 obtained Shareholders’ approval for the
proposed disposal of Cimelia to Mohamed Gani Mohamed Ansari (“Previous
Proposed Disposal”). Information on the Previous Proposed Disposal is set out in
the Company’s circular to Shareholders dated 14 September 2012. Further to
termination of the Previous Proposed Disposal as announced by the Company on 31
December 2012, the Purchaser has expressed the desire to acquire Cimelia and
offered to purchase the Sale Shares from the Company.
The Board, after careful consideration, is of the view that it is in the best interests of
the Group to undertake the Proposed Disposal for the following reasons:
(a)
The Proposed Disposal is in line with the Group’s on-going strategy to realign its principal investments in Singapore, and will allow the Group to
improve its operational efficiencies and reduce its operating costs in
Singapore;
(b)
The Purchase Price for the Proposed Disposal is significantly higher than
each of the net tangible asset value and book value of Cimelia as at 30
September 2012(B), being the date of the latest announced unaudited
financial statements of the Group for the financial period ended 30
September 2012. The Proposed Disposal will also allow the Group to realise
a gain on disposal, improve liquidity and to consolidate and deploy its
financial resources more efficiently. The Proposed Disposal thus presents a
good opportunity for the Group to realise and unlock the value of the Group’s
investments in Cimelia at a satisfactory price and to enhance our
Shareholders’ value; and
(c)
The proceeds from the Proposed Disposal will provide the Group with more
working capital to fund the operations and expansion of its other existing core
businesses and also to undertake new investment opportunities that may
arise in the future towards achieving a higher level of Shareholders’ value.
As at the date of this announcement, the Group’s core businesses comprise (i)
recycling, recovery and refining of precious metals; (ii) trading of electronic waste and
precious metals; (iii) plastic to fuel refining; and (iv) the provision of constructionrelated services such as piling services as well as rental of cranes and heavy
machinery for the construction industry. Although the Proposed Disposal will result in
the Group being divested of its current recycling, recovery and refining of precious
metals business operations dominantly in Singapore, the Proposed Disposal will not
have any material effect on the Group’s remaining and future business operations as
Cimelia has continued to operate independently and separately from the Group’s
other core businesses due to the different nature of the business activities.
Taking into account the above and the current operating conditions and the prospects
of the business as currently undertaken by Cimelia in Singapore, the Board after
careful consideration is of the view that the Purchase Price is fair and reasonable and
that the Proposed Disposal is in the best interests of the Group.
2.4
Purchase Price for the Proposed Disposal
2.4.1
The aggregate Purchase Price for the sale of the Sale Shares is US$20.0 million
(approximately S$24.6 million(A)). The Purchase Price was arrived at on a willing-
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buyer and willing-seller basis after arm’s length negotiations taking into account a
number of factors including, inter alia:
2.4.2
(a)
the net tangible asset value represented by the Sale Shares as at 30
September 2012(B); and
(b)
the current operating conditions and the prospects of the business as
currently undertaken by Cimelia in Singapore, and the future earnings
potential of certain assets of Cimelia.
Under the terms of the SPA, the Purchase Price shall be payable by the Purchaser to
the Company as follows:
(a)
The Purchaser shall pay the sum of US$1.25 million (approximately S$1.54
million(A)) (“Deposit”), by way of cashier’s order drawn in favour of the
Company (or in such other manner as the parties may mutually agree in
writing) on the date of the SPA.
(b)
The Purchaser shall pay the sum of US$2.50 million (approximately
S$3.08million(A)) at Closing (as defined below) on the Closing Date (as
defined below) by way of cashier’s order drawn in favour of the Company (or
in such other manner as the parties may mutually agree in writing).
(c)
The Purchaser shall pay the sum of US$2.25 million (approximately S$2.77
million(A)) by procuring the transfer to the Company and/or its nominee(s) of
certain agreed inventory items listed in the SPA (“Inventory Items”) free
from all encumbrances after Closing, and for this purpose, the parties agree
that the agreed aggregate value of the Inventory Items of US$2.25 million
(approximately S$2.77 million(A)) shall be applied towards payment on behalf
of the Purchaser of the Purchase Price to the extent of the agreed value of
the Inventory Items. The Inventory Items shall be collected by the Company
and/or its nominee(s) no later than five (5) business days after the Closing
Date.
(d)
The Purchaser shall pay the sum of US$2.00 million (approximately S$2.46
million(A)) by way of such number of ordinary shares in the share capital of
the Purchaser equivalent to the value of US$2.00 million (approximately
S$2.46 million(A)), valued by reference to the volume weighted average price
of the ordinary shares of the Purchaser on the last five (5) market days as
published on Bloomberg, on which transactions in the shares of the
Purchaser are recorded, preceding 24 May 2014, being the expiry date of
the current moratorium on such shares which shall form the consideration
shares (“Consideration Shares”).
(e)
The Purchaser shall procure that the certificates in the name of the
Company in respect of the 2.3 million ordinary shares in the share capital of
the Purchaser, to which Cimelia is entitled to as at the date of the SPA
pursuant to the Master Services Agreement (“Outstanding Shares”) will be
handed over in physical form to the Company and the Outstanding Shares
shall be credited into the Company’s dematerialisation account immediately
upon the expiry of the current moratorium on the Outstanding Shares on 24
May 2014, and in any case by no later than 30 June 2014. The aggregate
value of such Outstanding Shares, valued by reference to the volume
weighted average price of the ordinary shares of the Purchaser on the last
five (5) market days as published on Bloomberg, on which transactions in
the shares of the Purchaser are recorded, preceding 24 May 2014, being the
expiry date of the current moratorium on such shares, shall be applied
towards payment on behalf of the Purchaser of the Purchase Price to the
extent of the value of the Outstanding Shares valued in accordance with the
foregoing basis (“Value of the Outstanding Shares”).
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(f)
Subject to sub-paragraph 2.4.2(g) below, the balance consideration
calculated as the balance of US$20.00 million less the aggregate sum of the
(i) Deposit; (ii) cash payment of US$2.50 million; (iii) the agreed value of the
Inventory Items of US$2.25 million; (iv) the value of the Consideration
Shares of US$2.00 million; and (v) the Value of the Outstanding Shares
(“Balance Consideration”), shall be paid over a period of five (5) years in
five (5) equal instalments in accordance with the payment schedule below:
Instalment
First Instalment
Second Instalment
Third Instalment
Fourth Instalment
Fifth Instalment
Payment Due Date
On or prior to 31 December 2014
On or prior to 31 December 2015
On or prior to 31 December 2016
On or prior to 31 December 2017
On or prior to 31 December 2018
In the event the Purchaser shall fail to make payment of any instalment (or
part thereof) in accordance with the payment schedule set out above, interest
at the rate of 5.5% per annum shall be payable on any outstanding amount,
calculated on a daily rest basis, until all outstanding amount is fully paid
together with all accrued interest.
(g)
For purposes of payment of the Balance Consideration, the Company and
the Purchaser have agreed in the SPA as follows:
(i)
In the event the Purchaser shall be required to pay any withholding
tax to the applicable governmental authority in India, to the extent that
such amount actually paid by the Purchaser is subsequently
successfully recovered by the Company in Singapore, the Company
shall as soon as practicable notify the Purchaser in writing and all
such amount actually recovered by the Company shall be set-off
against the next instalment(s) payment of the outstanding Balance
Consideration.
(ii)
Notwithstanding the fixed payment schedule set out in sub-paragraph
2.4.2(f) above, the parties may agree that any part of the Balance
Consideration shall be payable at such earlier date(s) as the parties
may agree in writing, and to the extent of such early payment(s), the
amount payable (if any) under each of the remaining instalment(s)
under sub-paragraph 2.4.2(f) above shall be adjusted in such manner
with the intention that the Balance Consideration shall be fully paid at
the earliest date possible after Closing.
Under the terms of the SPA, in the event the Shareholders’ approval required for the
Company to undertake the Proposed Disposal (“Shareholders’ Approval”) is not
obtained for any reason whatsoever by 30 June 2013 (or such other date as the
Purchaser and the Company may agree in writing) (“Long-Stop Date”) or Closing
does not take place due to a material breach by the Company, the Deposit shall be
refunded to the Purchaser, together with all accrued interest.
In the event the Proposed Disposal is not completed for any other reason otherwise
than due to a material breach of the SPA by the Company, the Company shall be
entitled to forfeit the Deposit as liquidated damages for failure of the Purchaser to
complete the Proposed Disposal in accordance with the terms and conditions of the
SPA without any obligation on the part of the Company to transfer to the Purchaser
any part of the Sale Shares and the Purchaser shall not have any interest in or to, any
part of the Sale Shares.
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2.5
Salient Terms of the SPA
2.5.1
Conditions Precedent
Under the terms of the SPA, the completion of the Proposed Disposal (“Closing”) is
conditional upon the following conditions precedent:
2.5.2
(a)
each party having obtained all the relevant and necessary approvals from
their respective boards of directors, the BSE (if required), the SGX-ST and its
respective shareholders (including the Shareholders’ Approval) for the sale
and purchase of the Sale Shares on the terms and conditions of the SPA, as
may be applicable;
(b)
all consents, approvals and authorisations of bankers, financial institutions,
landlords of leases, relevant third parties, government or regulatory
authorities (as may be applicable) which are necessary or desirable in
connection with the transfer of the Sale Shares from the Company to the
Purchaser (or its nominee) and the ownership by the Purchaser (or its
nominee) of the Sale Shares, having been obtained, and such consents,
approvals and authorisations not being revoked or withdrawn on or prior to
the Closing Date;
(c)
all representations, warranties and undertakings of the parties under the SPA
being true, accurate and correct in all material respects as at the Closing
Date, as if repeated at Closing and at all times between the date of the SPA
and Closing, and those which shall be done, effected or completed on or prior
to Closing, being complied with on or prior to Closing;
(d)
execution of a share charge over the Sale Shares by the Purchaser (or by
such transferee of the Sale Shares (if not the Purchaser)) in favour of the
Company, on such terms and in such form satisfactory to the Company and
to be dated the Closing Date, for purposes of securing the full payment of the
Balance Consideration in accordance with the payment terms set out in subparagraph 2.4.2(f) above, on the terms set out in the SPA; and
(e)
neither party having received notice of any injunction or other order, directive
or notice restraining or prohibiting the consummation of the transactions
contemplated by the SPA, and there being no action seeking to restrain or
prohibit the consummation thereof, or seeking damages in connection
therewith, which is pending or any such injunction, other order or action
which is threatened.
Completion Date
Under the terms of the SPA, subject to the fulfilment (or waiver) of the conditions
precedent in the SPA, Closing of the Proposed Disposal shall take place on the later
of the following dates (or such other date as the Company and the Purchaser may
mutually agree in writing) (“Closing Date”):
2.5.3
(a)
the date falling 90 days from the date of the SPA; or
(b)
the date falling 14 days from the date the Shareholders’ Approval is obtained.
Representation, Warranties and Undertakings
Each of the Company and the Purchaser provided customary representations,
warranties and undertakings for transactions in the nature of the Proposed Disposal
in the SPA.
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2.6
Use of Proceeds
The Company expects to receive gross proceeds of US$20.0 million (approximately
S$24.6 million(A)) from the Proposed Disposal (excluding estimated transactional
expenses of approximately S$200,000 to be incurred in connection with the Proposed
Disposal).
The Company intends to utilise the proceeds from the Proposed Disposal to expand
and/or fund the costs, expenditure and working capital requirements of its existing
plastic to fuel refining and construction industry related core businesses and
operations, as general working capital for the requirements of the Group’s other
businesses and operations and for the Group to undertake new investment
opportunities that may arise in the future, as well as for distribution as dividends to
the Shareholders, subject to compliance with the provisions of the Companies Act.
2.7
Financial Effects of the Proposed Disposal
2.7.1
Illustrative effects of the Proposed Disposal on the NTA and EPS of the Group
The excess of the Purchase Price over each of the NTA and book value of Cimelia as
at 30 September 2012 is approximately US$11,268,000(B) (approximately
S$13,859,640(A)(B)). Cimelia recorded a loss of approximately US$2,890,000
(approximately S$3,554,700(A)) for the financial period ended 30 September 2012.
Based on the unaudited financial statements of the Group for the financial period
ended 30 September 2012, after providing for transactional expenses to be incurred
by the Group in connection with the Proposed Disposal, the Group is expected to
record a net gain on disposal of approximately US$3,162,000 (approximately
S$3,889,000(A)) from the Proposed Disposal.
The pro forma financial effects of the Proposed Disposal on the Group have been
prepared based on the Group’s unaudited consolidated financial statements for the
twelve (12) months period ended 30 September 2012 as the Group’s full year
financial results for the financial year ended 31 December 2012 have not been
announced as at the date of this announcement. These pro forma financial effects are
purely for illustrative purposes only and do not reflect the future actual financial
position and results of the Group after the completion of the Proposed Disposal.
(A)
Net Tangible Asset (“NTA”)
Assuming that the Proposed Disposal had been completed on 30 September 2012,
the pro forma financial effects of the Proposed Disposal on the NTA per share of the
Group as at 30 September 2012 would have been as follows:
NTA (S$’000)
Number of issued shares excluding treasury
shares (’000)
NTA per share (cents)
(B)
Before the
Proposed
Disposal
53,136
887,658
After the
Proposed
Disposal
57,025
887,658
5.99
6.42
Earnings per Share (“EPS”)
Assuming that the Proposed Disposal had been completed on 1 October 2011 and
the loss incurred by Cimelia during the twelve (12) months period ended 30
September 2012 was entirely attributable to the NTA of Cimelia in the Proposed
Disposal(B), the pro forma financial effects of the Proposed Disposal on the EPS of the
Group for the twelve (12) months period ended 30 September 2012 would have been
as follows:
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Profit/(Loss) attributable to Shareholders
(S$’000)
Basic EPS
Weighted average number of issued shares
(’000)
Basic EPS (cents)
Diluted EPS
Weighted average number of issued shares
(’000)
Diluted EPS (cents)
2.7.2
Before the
Proposed
Disposal
(4,682)
After the
Proposed
Disposal
(793)
873,541
873,541
(0.54)
(0.09)
873,541
873,541
(0.54)
(0.09)
Relative Figures Computed on the Bases Set Out in Rule 1006 of the Listing Manual
(a)
Rule 1006(a)
The net asset value (“NAV”) of Cimelia of approximately
S$10,740,360(A)(B) (US$8,732,000) as at 30 September
2012 compared with the Group's NAV of S$57,564,000 as
at 30 September 2012
(b)
Rule 1006(b)
The net loss(1)(2) attributable to Cimelia of US$2,890,000
(approximately S$3,554,700(A)) compared with the Group's
net loss(1)(2) of S$10,055,000.
(c)
35%
Rule 1006(c)
The aggregate value of the Purchase Price of US$20.0
million (approximately S$24,600,000(A)) compared with the
Company's market capitalisation(3) of approximately
S$97,579,370 (based on the weighted average price of the
Company’s shares on the SGX-ST of S$0.099 on 5
February 2013)
(d)
19%
25%
Rule 1006(d)
Not applicable
Note(s):
(1)
Under Rule 1002(3)(b) of the Listing Manual, “net profits” means profit or loss
before income tax, minority interests and extraordinary items.
(2)
Based on the latest announced unaudited profit and loss accounts for the
financial period ended 30 September 2012.
(3)
Under Rule 1002(5) of the Listing Manual, the market capitalisation of the
Company is determined by multiplying the number of shares in issue by the
weighted average price of such shares transacted on the market day preceding
the date of the SPA.
As the relative figures calculated under Rule 1006(b) and Rule 1006(c) of the Listing
Manual are more than 20%, the Proposed Disposal is considered a major transaction
under Chapter 10 of the Listing Manual, and is therefore subject to Shareholders’
approval.
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3.
DIRECTORS’ AND CONTROLLING SHAREHOLDERS’ INTERESTS
Save for their respective shareholdings in the Company, if any, none of the directors
or controlling Shareholders of the Company has any interest, direct or indirect, in the
Proposed Disposal.
4.
EXTRAORDINARY GENERAL MEETING AND CIRCULAR
As set out in paragraph 2.7.2 of this announcement above, the relative figures
calculated under Rule 1006(b) and Rule 1006(c) of the Listing Manual are more than
20%. Pursuant to Rule 1014 of the Listing Manual, the Company has to obtain
Shareholders’ approval for the Proposed Disposal.
A circular containing further details on the Proposed Disposal and enclosing a notice
of EGM in connection therewith will be despatched to the Shareholders in due course.
5.
DOCUMENTS AVAILABLE FOR INSPECTION
A copy of the SPA will be made available for inspection during normal business hours
at the Company’s registered office at 3 Tuas Avenue 2, Singapore 639443 for a
period of three (3) months commencing from the date of this announcement.
Shareholders and potential investors should note that the Proposed Disposal is
subject to the fulfillment of, inter alia, the conditions precedent set out above and
accordingly should exercise caution when trading in the shares of the Company.
Persons who are in doubt as to the action they should take should consult their legal,
financial, tax or other professional advisers.
Note(s):
(A)
For the purposes of this announcement, the exchange rate of US$1.00 to S$1.23 as at 5
February 2013 (being the latest practicable date prior to the date of this announcement) has
been used for the purposes of calculation.
(B)
For the purposes of this announcement and the Proposed Disposal, references to the net
tangible asset value and net asset value of Cimelia shall exclude all inter-company balances
(due to), cash in bank and cash in hand (save for the agreed minimum cash amount of US$ 1.0
million which the parties have agreed shall be retained in Cimelia as at Closing), trade and nontrade payables and trust receipts of Cimelia.
BY ORDER OF THE BOARD
Raymond Ng Ah Hua
Executive Chairman
6 February 2013
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