ADVANCE SCT LIMITED (Company Registration No.: 200404283C) (the Company ) PROPOSED ACQUISITION OF SOON SING METAL TRADING SDN BHD, 49.9% OF PAID-UP SHARE CAPITAL OF NEW TSINGYI PTE LTD AND PROPOSED SETTLEMENT OF ADVANCES MADE TO NEW TSINGYI PTE LTD BY SHARE ISSUE OF NEW ORDINARY SHARES IN THE CAPITAL OF THE COMPANY - THE PROPOSED ACQUISITION OF THE ENTIRE ISSUED AND PAID-UP SHARE CAPITAL OF SOON SING METAL TRADING SDN BHD TO BE SATISFIED BY THE ALLOTMENT AND ISSUE OF NEW ORDINARY SHARES IN THE SHARE CAPITAL OF ADVANCE SCT LIMITED - THE PROPOSED ACQUISITION OF 49.9% OF THE PAID-UP SHARE CAPITAL OF NEW TSINGYI PTE LTD TO BE SATISFIED BY THE ALLOTMENT AND ISSUE OF NEW ORDINARY SHARES IN THE SHARE CAPITAL OF ADVANCE SCT LIMITED - THE PROPOSED SETTLEMENT OF ADVANCES MADE TO NEW TSINGYI PTE LTD BY SOON SING METAL TRADING SDN BHD, LIM CHWEE POH, TAN SENG KIAH AND WONG WEE KEONG TO BE SATISFIED BY THE ALLOTMENT AND ISSUE OF NEW ORDINARY SHARES IN THE SHARE CAPITAL OF ADVANCE SCT LIMITED 1. Introduction The Board of Directors of Advance SCT Limited ( ASCT or the Company ) wishes to announce that the Company has on 8 October 2010 entered into a conditional sale and purchase agreement (the Sale and Purchase Agreement ) with Lim Chwee Poh, Wong Wee Keong, Yar Kim Nan, Lim Tze Ming Kelvin, Soh Loo Sing, Tan Seng Kiah, Lim Txe Chong Patrick (Lin Zhizhong, Patrick), Lim Soon Hong, and Hung Wai Keong (collectively the Vendors and each a Vendor ), pursuant to which the Company has agreed to acquire ( Proposed Acquisitions): the entire issued and paid-up share capital of Soon Sing Metal Trading Sdn Bhd ( SSMT ); 49.9% paid-up share capital of New Tsingyi Pte Ltd ( NTY ) from SSMT; and the advances made by SSMT, Lim Chwee Poh, Tan Seng Kiah and Wong Wee Keong to NTY for its working capital requirements.
SSMT, a company incorporated in Malaysia, is engaged in the recycling and trading of ferrous and non-ferrous scrap metals. SSMT operates from a factory in Johor, West Malaysia and mainly carries out its business activities in Malaysia. NTY, a company incorporated in Singapore, is a joint venture between ASCT and SSMT where ASCT holds 50.1% of the share capital of NTY. NTY is engaged in the recycling and trading of ferrous and non-ferrous scrap metals. NTY operates from a factory in Singapore and has an international network of customers and suppliers. 2. Details of the Proposed Acquisitions 2.1 The Proposed Acquisitions Pursuant to the terms and conditions set out in the Sale and Purchase Agreement, the Company will acquire from: the Vendors 2,700,000 ordinary shares in the issued and paid up share capital of SSMT (the Sale Shares A ), representing 100% of the issued and paid up share capital of SSMT; the Vendors SSMT s 200,000 ordinary shares in the issued and paid up share capital of NTY (the Sale Shares B ), representing 49.9% of the issued and paid up share capital of NTY; and SSMT, Lim Chwee Poh, Tan Seng Kiah and Wong Wee Keong (the Parties ) S$2,050,000 of advances made to NTY by the Parties (the Advances ). 2.2 Consideration The purchase consideration for: Sale Shares A shall be S$1,332,000, being the net book value of fixed assets, inventory, cash in bank and business licences of SSMT (the Assets ) as of 30 June 2010 and shall be adjusted for any changes in the value of the Assets as of the date where the shareholders of the Company approved this transaction in an Extraordinary General Meeting or such other date as mutually agreed by the Company and Vendors. This acquisition does not include the value of investment in NTY. Sale Shares B shall be S$200,000, being the money injected by SSMT, by way of SSMT s investment in NTY for the 49.9% of issued and paid-up capital. Advances shall be S$2,050,000, being the money injected by SSMT, Lim Chwee Poh, Tan Seng Kiah and Wong Wee Keong as advances for NTY s working capital needs. (the Purchase Considerations )
The Purchase Considerations will be satisfied by way of an issue of new ordinary shares in the capital of the Company (the Consideration Shares ), at an issue price per share of S$0.0306, which represents a discount of approximately 15 per centum to the average of the volume weighted average price of the Company s Shares for five consecutive market days immediately prior to the date of the Sale and Purchase Agreement. The Consideration Shares for Sale Share A, Sale Share B, and the Advances made to NTY by SSMT shall be allotted and issued to the Vendors in proportion to their respective shareholdings in SSMT immediately preceding the Completion Date (as hereinafter defined) in exchange for the transfer of the whole of the Sale Share A and Sale Share B by the Vendors, and the release of the Advances made to NTY by SSMT. The Consideration Shares shall be held by individual shareholders of SSMT and not by the SSMT, the company. The Consideration Shares, when allotted and issued, will rank pari passu in all respects with the existing ordinary shares in the capital of the Company. 2.3 Basis for Payment The Purchase Considerations were arrived at on a willing-buyer and willing-seller basis taking into account the following factors: book value of the fixed assets, inventory, cash in bank, and business licenses of SSMT based on the unaudited management accounts of SSMT for the 6 months period ended 30 June 2010; the historical value of the 200,000 fully paid-up shares in the capital of NTY legally and beneficially held by SSMT; and the book value of the advances made to NTY by SSMT, Lim Chwee Poh, Tan Seng Kiah, and Wong Wee Keong which remain outstanding as of the date of the Sale and Purchase Agreement. Based on the audited financial statements of SSMT for FY2009, the net tangible asset value of the Sale Shares A was about Malaysia Ringgit 2,833,000 or S$1,161,000. As at 30 June 2010, the net tangible asset value of the Sale Shares is about Malaysia Ringgit 3,657,000 or S$1,572,000. Based on the audited financial statements of NTY for FY2009, the book value of the Sale Shares B was about S$156,200. As at 30 June 2010, the book value of the Sale Shares B is about S$161,929. 2.4 Completion Completion shall take place on a date falling five (5) business days after the last of the outstanding conditions set out in the sale and purchase agreement have been fulfilled
or waived, or such other date as the Company and the Vendors may mutually agreed in writing (the Completion Date ) 2.5 Condition Precedent Completion is conditional upon the fulfillment of the following conditions on or before the Completion Date: all due diligence exercises on the sale conducted by the Company, being satisfactory to the Company; all necessary regulatory and other approvals being obtained by the Company, including its respective boards and shareholders approval being obtained at an Extraordinary General Meeting, for the Proposed Acquisitions; and all consents or approvals as may be required of the SGX-ST, any third party or government authority, regulatory body or competent authority having jurisdiction over the sale and transfer of Sale Shares A and Sale Shares B. 3. Rationale for the Proposed Acquisitions The acquisition of Sale Shares A will enable the group to expand its businesses into Malaysia and generate new revenue streams. The new facilities will also support the Group s smelting activities in Klang. The acquisition of Sale Shares B will enable the group to exercise better control over as well as increase its share of economic benefits from the businesses of NTY. The acquisition of Advances is to allow the group to retain the additional working capital of NTY provided by the vendors. It will also strengthen the capital base of the group as a whole. 4. Computation Pursuant to Rule 1006 of the SGX-ST Listing Manual The relative figures computed on the bases set out in Rule 1006 of the SGX-ST Listing Manual are as follows: Rule 1006 (a) Rule 1006 (b) Not applicable to acquisition The net profits attributable to the assets acquired is 44.2% of the Company and its subsidiaries (the Group ) net profit based on the latest announced financial statements of the Group for the half year ended 30 June 2010.
Rule 1006 (c) The Consideration compared to the Company s market capitalization is approximately 20.2% based on the Company s market capitalization of approximately S$17.73 million as at 7 October 2010. Rule 1006 (d) The number of Consideration Shares compared to the number of shares of the Company in issue is 26.41%. As the relative figures as computed on the above bases for Rule 1006 (b), Rule 1006 (c) and Rule 1006 (d) exceed 20%, the proposed Acquisition constitutes a major transaction within the meaning of Chapter 10 of the Listing Manual. The Company is therefore seeking the approval of the shareholders of the Company in general meeting for the Proposed Acquisitions. A circular containing information relating, inter alia, to the Proposed Acquisition will be sent to all the shareholders of the Company at a later date. 5. Financial Effects of the Proposed Acquisitions The proforma financial effects of the Proposed Acquisitions on the Group are set out below. The objective of the proforma financial effects is to illustrate what the historical financial information of the Group might have been had the Proposed Acquisitions been completed at an earlier date. Given that the proforma financial effects set out below are theoretical in nature and only for illustrative purposes, they do not represent the actual financial position and/or results of the Group s operations after the completion of the Proposed Acquisitions and are not indicative of the future financial position and earnings of the Group. For the purpose of illustration and based on the consolidated financial statements of the Group of the financial year ended 31 December 2009, the financial effects of the Proposed Acquisition are set out below:- Before the Proposed Acquisitions After the Proposed Acquisitions Net tangible assets (S$ 000) Number of Shares Net tangible assets per share (cents) (assuming the Proposed Acquisitions was effected as at 31 December 2009) (61,873) 367,951,865 (16.81) (58,291) 485,010,689 (12.02)
(Loss) attributable to shareholders (S$ 000) Weighted average number of shares (Loss) per share (cents) (assuming the Proposed Acquisitions was effected on 1 January 2009) (42,399) 321,298,440 (13.20) (42,348) 438,357,264 (9.66) 6. Interests of Directors and Substantial Shareholders None of the directors or substantial shareholders of the Company has any interest, direct, or indirect, in the Proposed Acquisition. 7. Details of any service contracts of the directors proposed to be appointed to the Issuer in connection with the transaction There are no directors who are proposed to be appointed to the Board of the Company in connection with the Proposed Acquisition. 8. Responsibility Statement The Directors of the Company (including those who may have delegated detailed supervision of this announcement) have taken all reasonable care to ensure that the facts stated in this announcement are fair and accurate and that no material facts have been omitted from this announcement, and they jointly and severally accept responsibility accordingly. By Order of the Board ADVANCE SCT LIMITED Simon Eng Executive Chairman 9 October 2010