New Silkroutes Group Limited (NSG) on Monday (25 March) announced its wholly-owned subsidiary New Silkroutes Capital Pte. Ltd has signed a share sale and purchase agreement with Hong Kong-based TK Energy Limited for the disposal of the entire shareholding interests in International Energy Group Pte. Ltd. (IEG) for US $10 million in cash.
Singapore-headquartered IEG, which trades mainly gas oil and fuel oil, sells its products to international counterparties including oil majors and national oil companies.
The consideration for the disposal was reached after arm’s length negotiation with the purchaser, on a willing-buyer and willing-seller basis, and taking into account the historical earnings and net tangible assets of IEG.
In connection with the disposal, TK Energy will make available to NSG a loan of US $10 million which will be deemed repaid in full when the disposal is completed.
As part of the acquisition, TK Energy will also make available to IEG credit facilities of up to US $250 million of which an initial loan of US $50 million will be advanced to IEG, which will be capitalised as shares in the latter upon completion of the sale and purchase agreement.
The disposal is subject to certain conditions, including the approvals from the SGX-ST and shareholders.
Thereafter, IEG will cease to be a subsidiary of NSG and the company will become a full-fledged healthcare group.
“We have secured a financially strong strategic buyer for IEG and we are pleased that they also recognise the value of our oil trading division,” said Dr Goh Jin Hian, CEO of NSG.
“The sale will provide the Group with the funds to expand its healthcare business locally and regionally, through a mix of acquisitions, collaborations, and organic growth.
“Moving ahead with healthcare as our core focus, we aim to deliver shareholder value in the longer term.
“For a start, NSG has plans to resolve the issue of longstanding negative retained earnings with capital reorganisation. After this exercise, NSG will have a more efficient capital structure, and will be well positioned to start dividend payments, thereby improving shareholders’ return on equity.”
Published: 26 March, 2019
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