ENTRY INTO A SALE AND PURCHASE AGREEMENT IN RELATION TO THE PROPOSED DISPOSAL BY THE COMPANY OF 100 SHARES IN NATURAL COOL ENERGY PTE.

Transcription

1 (Incorporated in the Republic of Singapore) Company Registration No G This announcement has been prepared by the Company and its contents have been reviewed by the Company s sponsor, PrimePartners Corporate Finance Pte. Ltd. (the Sponsor ), for compliance with the Singapore Exchange Securities Trading Limited (the SGX-ST ) Listing Manual Section B: Rules of Catalist. The Sponsor has not verified the contents of this announcement. This announcement has not been examined or approved by the SGX-ST. The Sponsor and the SGX-ST assume no responsibility for the contents of this announcement, including the accuracy, completeness or correctness of any of the information, statements or opinions made or reports contained in this announcement. The contact person for the Sponsor is Mr Lance Tan, Director, Continuing Sponsorship, at 16 Collyer Quay, #10-00 Income at Raffles, Singapore , telephone (65) ENTRY INTO A SALE AND PURCHASE AGREEMENT IN RELATION TO THE PROPOSED DISPOSAL BY THE COMPANY OF 100 SHARES IN NATURAL COOL ENERGY PTE. LTD. REPRESENTING 100% OF THE ISSUED SHARE CAPITAL OF THE TARGET COMPANY 1. Introduction 1.1 The Board of Directors (the Board ) of Natural Cool Holdings Limited (the Company and together with its subsidiaries, the Group ) wishes to announce that the Company has on 22 April 2016 entered into a sale and purchase agreement ( Agreement ) with Joseph Ang Choon Cheng and Eric Ang Choon Beng (each a Purchaser and collectively, the "Purchasers"), in respect of the proposed disposal (the "Proposed Disposal") by the Company of all the issued ordinary shares in Natural Cool Energy Pte. Ltd. (the Target Company ). 1.2 As at the date of this announcement, Joseph Ang Choon Cheng is the Executive Chairman and Executive Director of the Company and Eric Ang Choon Beng is the Executive Director of the Company. Accordingly, the Proposed Disposal is an interested person transaction under Chapter 9 of the Listing Manual Section B: Rules of Catalist ("Catalist Rules") of the SGX-ST. Further details on the Proposed Disposal as an interested person transaction are elaborated in paragraph 9 below. 2. Information on the Target Company 2.1 The Target Company is a company with limited liability, incorporated under the laws of the Republic of Singapore on 01 February As at the date of this announcement, the Target Company has an issued share capital of S$ comprising 100 fully paid ordinary shares (the "Existing Target Shares"), all of which are owned by the Company. The Target Company is an investment holding company, which holds shares directly in Loh & Sons Paint Co (S) Pte Ltd ( Subsidiary, collectively with the Target Company, the "Target Group"). 1

2 2.2 Loh & Sons Paint Co (S) Pte Ltd is a company with limited liability, incorporated under the laws of the Republic of Singapore on 1 April As at the date of this announcement, Loh & Sons Paint Co (S) Pte Ltd has an issued and paid-up share capital of S$50,000 comprising 50,000 ordinary shares of which 100% is owned by the Target Company. The principal activity of Loh & Sons Paint Co (S) Pte Ltd is the business of manufacturing of paint and basic chemicals in Singapore. 2.3 The Subsidiary was acquired by the Target Company on 01 September 2015, as announced by the Company in its announcements dated 30 July 2015, 31 August 2015 and 01 September As set out in the then earlier announcements, as at 31 December 2014 the net tangible asset value of the Subsidiary was approximately S$1.31 million. The consideration for the acquisition of the Subsidiary by the Target Company was approximately S$7.00 million and was then financed by bank borrowings by the Target Company of approximately S$5.00 million and inter-company borrowings by the Target Company for the remaining amounts of approximately S$2.00 million. The acquisition then was also on the basis that: (a) (b) the property of the Subsidiary situated at 38 Lok Yang Way (the Property ) which was valued at S$5.87 million; and that the Target Company had acquired the Subsidiary without any working capital including accounts receivables which were retained by the then vendors. In turn, all accounts payable and other liabilities of the Subsidiary up to a predetermined cutoff date would be assumed and discharged by the then vendors 2.4 The Proposed Disposal is now of the Target Company and the Subsidiary, and as part of the terms of the Proposed Disposal, all bank borrowings and part of the inter-company borrowings then used to finance the acquisition of the Subsidiary by the Target Company would be transferred to the Purchasers in accordance with the Proposed Disposal. 2.5 Consequential upon the Target Company having to finance the acquisition of the Subsidiary borrowings and a goodwill arising for the then acquisition of approximately S$0.98 million, for the three (3) months period ended 31 March 2016 (the "Unaudited Management Accounts ), the Target Group recorded consolidated net losses of S$0.05 million. As at 31 March 2016, the Target Group had a net liability position of S$0.31 million, and a net tangible liability position of S$1.30 million. 2.6 In addition, as the Subsidiary represented a new business for the Company, and due to costs such as those associated with the acquisition by the Target Company of the Subsidiary and interest expenses, for the financial year ended 31 December 2015 ( FY2015 ), the Target Group recorded consolidated net losses of S$0.26 million. As at 31 December 2015, the Target Group had a net liability position of S$0.26 million, and a net tangible liability position of S$1.25 million. 3. The Proposed Disposal 3.1 The Company shall sell, and the Purchasers shall purchase, all of the issued shares ("Sale Shares") in the Target Company as at Completion. The Sale Shares comprise (a) the entire legal and beneficial ownership in the Existing Target Shares; and (b) such number of new fully paid shares in the capital of the Target Company (the "NCE Capitalisation Shares") as may be decided by the Company in its discretion after consultation with the Purchasers, arising from the capitalization (the "NCE Recapitalisation") of an amount of S$1,209,900 due from the Target Company to the Company, free from all encumbrances and with all rights and advantages attaching to them as from Completion (as defined below). 2

3 3.2 The consideration payable by the Purchasers for the Sale Shares is an aggregate of S$50,000 ( Consideration ), payable in such manner to be reasonably specified by the Company on Completion Date (as defined below). Each of the Purchasers shall pay half of the Consideration. 3.3 The Consideration was arrived at on a willing buyer-willing seller basis, after taking into account the financial performance and financial position of the Target Group in FY2015, the Unaudited Management Accounts, the NCE Recapitalisation, and an independent valuation of the Property of S$ 5.57 million conducted by Asia Integrated Property Services Pte Ltd on 19 April 2016 ( Valuation Report ). The industrial property is secured with a bank loan amounting to S$5.00 million as at 31 March The deficit of the Consideration over the book value of the Sale Shares (after taking into consideration the NCE Recapitalisation), is S$0.85 million based on the Unaudited Management Accounts. 3.5 The Company is expected to recognise a net loss from the Proposed Disposal of approximately S$0.87 million after deducting the net book value of the Target Company (after taking into consideration the NCE Recapitalisation) and professional fees. 4. Conditions precedent attached to the Proposed Disposal 4.1 Completion of the Proposed Disposal is conditional upon the following conditions ( Conditions ) having been fulfilled or waived in accordance with paragraph 4.2 below: (a) (b) (c) (d) (e) (f) (g) the approval of the board and the shareholders (if required) of the Company in relation to the sale of the Sale Shares to the Purchasers (cannot be waived); there not being at any time prior to Completion any restriction, limitation, prohibition or directive, whether written or verbal, from the SGX-ST limiting prohibiting the entry into or performance by the Company of its obligations under the Agreement (cannot be waived); all necessary third party, governmental and regulatory consents, approvals and waivers where required for the transactions contemplated hereunder having been obtained, and such consents, approvals and waivers not having been revoked before Completion Date (cannot be waived); the completion of the NCE Recapitalisation and the issuance and allotment of the NCE Capitalisation Shares to the Company (cannot be waived); full repayment by the Target Company, or by the Purchasers on behalf of the Target Company, of all advances from the Company to the Target Company as at Completion (after deducting the amount applied for the NCE Recapitalisation), and for reference as at 31 March 2016 (the "Management Accounts Date") is S$1,243,890.09; full repayment by Loh & Sons Paint Co (S) Pte Ltd, or by the Purchasers on behalf of Loh & Sons Paint Co (S) Pte Ltd, of all advances from the Company to Loh & Sons Paint Co (S) Pte Ltd as at Completion, and for reference as at the Management Accounts date is S$114,696.50; consents being obtained from the bankers of the Company, Target Company and Loh & Sons Paint Co (S) Pte Ltd, where such consent is required, in form and on terms acceptable to the Company and the Purchasers (cannot be waived); 3

4 (h) (i) there being no Material Adverse Change in respect of the Target Group (can be waived by the Purchasers); and there being no applicable laws that have the effect of prohibiting, delaying, making illegal or otherwise restraining Completion in accordance with the terms of the Agreement and neither the Company, the Purchasers nor the Target Group having received notice of any injunction or other order, directive, or notice restraining or prohibiting the consummation of the transactions hereby contemplated, 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 (cannot be waived). 4.2 Each of the Company and the Purchasers shall use all reasonable endeavours to ensure that the Conditions are fulfilled as soon as practicable. If the Conditions are (a) not fulfilled and, (b) where they can be waived, waived by the Company or the Purchasers, as the case may be, by 30 June 2016, then the Agreement shall terminate and the Company and the Purchasers shall be discharged from all liabilities and obligations under the Agreement, save for such liabilities and obligations accruing prior to such termination. 5. Corporate Guarantees of the Target Group 5.1 As at the date of the Agreement, the Company had provided (a) three (3) corporate guarantees to secure certain credit facilities granted to the Loh & Sons Paint Co (S) Pte Ltd; and (b) one (1) corporate guarantee to secure certain credit facilities granted to the Target Company (collectively, the Corporate Guarantees ). 5.2 The Company and the Purchasers have, in the Agreement, agreed to in good faith and within 90 days after the Completion Date, work together to effect the removal and discharge of the Corporate Guarantees. 5.3 In the event that any of the Corporate Guarantees are called upon by the banks, the Purchasers have agreed to indemnify the Company from and against any and all costs and expenses incurred by the Company arising from such an event. 6. Completion of Proposed Disposal 6.1 Completion of the Proposed Disposal ( Completion ) shall take place on a date falling within 45 calendar days that all Conditions have been fulfilled, or such other date as the Company and the Purchasers may mutually agree in writing ( Completion Date ). 6.2 In the event that any of the Conditions are not fulfilled or waived by the Completion Date and/or any of the completion deliverables by the Company are not delivered on the Completion Date, the party not in default (the "Non-Defaulting Party") may, without prejudice to any other rights or remedies available to Non-Defaulting Party against the defaulting party, elect to: (a) (b) (c) terminate the Agreement, in which case the provisions of the Agreement (save for certain Clauses of the Agreement) shall from such date cease and determine; to effect Completion so far as practicable, having regard to the defaults which have occurred; or to fix a new date for Completion (not being later than five (5) Business Days from the Completion Date), in which case the provisions of this paragraph 6 shall also apply 4

5 to any such new date fixed for the Completion as so deferred but provided such deferral may only occur once. 7. Rationale of the Proposed Disposal 7.1 Following the successful sale of the Company s switchgear division in November 2015, the Company conducted a review of its businesses and operations with a view to streamlining its corporate strategy to focus on its core business, being the air-conditioning business, or invest in businesses that may provide greater shareholder value. 7.2 The Proposal Disposal takes into account that the Purchasers will be assuming responsibility for the bank loans that were taken to finance the initial acquisition by the Company of Loh & Sons Paint Co (S) Pte Ltd. As at the date of this announcement, such bank loan amounted to approximately S$5.00 million. The Consideration for the Proposed Disposal is at a discount to the net asset position of the Target Group, and at a premium to the net tangible liability position of the Target Group after taking into account the NCE Recapitalisation. 7.3 The Proposed Disposal will also allow the Company to recover approximately S$1.36 million in inter-company loans in cash, and strengthen its financial and capital resources. 7.4 Following the Proposed Disposal, the Group s remaining business will include its airconditioning business division. 8. Use of Proceeds The estimated net proceeds from the Proposed Disposal is S$0.03 million after taking into account the professional fees incurred in relation to the Proposed Disposal ( Net Proceeds ).The Company intends to utilize the Net Proceeds for general working capital purposes. 9. Interested Person Transactions 9.1 As stated in paragraph 1 of this announcement, Joseph Ang Choon Cheng is the Executive Chairman and Executive Director of the Company and Eric Ang Choon Beng is the Executive Director of the Company. Accordingly, they will be regarded as interested persons of the Company for the purposes of Chapter 9 of the Catalist Rules of the SGX-ST for the Proposed Disposal. Therefore, the Proposed Disposal constitutes an interested person transaction under Chapter 9 of the Catalist Rules of the SGX-ST. 9.2 The value of the transaction for purposes of applying Chapter 9 of the Catalist Rules of the SGX-ST is S$0.90 million, arrived at after taking into consideration the net liability value of the Target Group as at 31 March 2016 of S$0.31 million, and the NCE Recapitalisation, accordingly, the value of the transaction represents approximately 1.86% of the latest audited net tangible assets ( NTA ) of the Group of S$48.42 million as at 31 December 2015 (the "2015 Group NTA"). 9.3 Save for the Proposed Disposal and as at the date of this announcement, there are no other interested person transactions entered into between the Company and each of the Purchasers since 01 January 2016 up to the date of this announcement. 5

6 10. Financial Effects of the Proposed Disposal 10.1 The financial effects have been prepared on a proforma basis based on the consolidated financial statements of the Group for FY2015 ( FY2015 Results ). The financial effects of the Proposed Disposal on the Group set out below are purely for illustrative purposes only and do not reflect the future financial position of the Company or the Group after the completion of the Proposed Disposal Effect of Proposed Disposal on NTA per Share Assuming that the Proposed Disposal had been completed on 31 December 2015 and based on the FY2015 Results, the effect of the Proposed Disposal on the NTA per share of the Company ( Share ) are as follows: Before Completion of the Proposed Disposal After Completion of the Proposed Disposal NTA (S$ 000) 48,423 47,508 Number of issued Shares 205,447, ,447,985 NTA per share (Singapore cents) Effect of Proposed Disposal on Earnings per Share ( EPS ) Assuming that the Proposed Disposal has taken place on 01 January 2015 and based on the FY2015 Results, the Proposed Disposal would have the following effects on the Group s EPS as presented in the following table: Consolidated net profit attributable to shareholders (S$ 000) Weighted average number of Shares Before Completion of the After Completion of the Proposed Disposal Proposed Disposal 6,495 5, ,447, ,447,985 EPS (Singapore cents) Relative Figures under Rule 1006 of the Catalist Rules Based on the audited consolidated financial statements of the Group for year ended 31 December 2015, the relative figures in respect of the Proposed Disposal, as computed on the bases set out in Rule 1006 of the Catalist Rules are as follows: Rule 1006 (a) The net asset value of the assets to be disposed of, compared with the Group s net asset value as at 31 December Target Company (S$ 000) Group (S$ 000) , Relative Figures (%) Rule 1006 (b) The net profit attributable to the assets disposed of, compared with (256) 6,495 (3.94) 6

7 the Group s net profit for FY2015. Rule 1006 (c) Aggregate value of consideration received, compared with the market capitalisation of the Company as at 20 April 2016, being the last full market day with trades done immediately preceding the execution of the Agreement Rule 1006 (d) The number of equity securities issued by the Company as consideration for an acquisition, compared with the number of equity securities previously in issue. Rule 1006 (e) The aggregate volume or amount of proved and probable reserves to be disposed of, compared with the aggregate of the Group s proved and probable reserves. This basis is applicable to a disposal of mineral, oil or gas asset by a mineral, oil and gas company, but to an acquisition of such assets. 1,410 28, Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Note:- (1) The market capitalisation of the Company of approximately S$28.6 million is determined by multiplying 205,447,985 Shares in issue by the volume weighted average price of S$0.139 of such Shares transacted as at 20 April 2016, being the market day with trades done preceding the date of the Agreement. (2) Rule 1006(a) has been calculated on the basis that the NCE Recapitalisation has been completed on 31 December (3) The aggregate value of consideration under Rule 1006(c) has been calculated to take into account the inter-company loan of S$1.36 million, as mentioned in paragraph 7.3 of the announcement, which will be transferred to the Purchasers pursuant to the terms of the Agreement. While the Board notes that the relative figure computed under Catalist Rules 1006(b) is a negative figure, and under Rule 1007(1), if any figures computed pursuant to Rule 1006 is a negative figure, Chapter 10 of the Catalist Rules may still be applicable to this transaction. Notwithstanding that the relative figure under Rule 1006(b) is negative, under paragraph 10 of Practice Note 10A, the profit test will not apply if the assets to be disposed of are noncore or loss-making. As none of the relative figures computed above exceed 5%, the Proposed Disposal constitutes a Non-Discloseable transaction under Chapter 10 of the Catalist Rules. 7

8 12. Interests of Directors and Controlling Shareholders Save as disclosed herein, none of the Directors or controlling shareholders of the Company have any direct or indirect interest in the Agreement or the Proposed Disposal, other than through their respective shareholdings in the Company. 13. Directors 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 this announcement in its proper form and context. 14. Directors Service Contracts No person is proposed to be appointed as a director of the Company in connection with the Proposed Disposal. Accordingly, no service contract is proposed to be entered into between the Company and any such person. 15. Documents for Inspection A copy of the Agreement and the Valuation Report will be available for inspection during normal business hours at the Company s registered office at 29 Tai Seng Avenue, #07-01 Natural Cool Lifestyle Hub, Singapore for three (3) months from the date hereof. 16. Cautionary Statement Shareholders of the Company should note that the terms of the Proposed Disposal as set out in the Agreement are indicative. There is no certainty or assurance as at the date of this announcement that the Proposed Disposal will be completed. Accordingly, shareholders of the Company are advised to exercise caution when trading in the Shares of the Company. The Company will make the necessary announcements when there are further developments on the Proposed Disposal and other matters contemplated by this announcement. Persons who are in doubt as to the action they should take should consult their legal, financial, tax or other professional advisers. BY ORDER OF THE BOARD Leaw Wei Siang Company Secretary 23 April

9 About Natural Cool Holdings Limited Established in 1989 and listed on Catalist (formerly known as SESDAQ) in May 2006, Natural Cool provides installation, maintenance, repair and replacement services for air-conditioning systems to the residential segment, both public and private; and commercial sectors, which include factories, offices, condominiums, schools and hospitals, in Singapore. In addition, the Group sells air-conditioning components and tools used for the installation and servicing of airconditioning business. 9