MAINBOARD-LISTED Fabchem China on Thursday proposed to fully acquire Singapore-based interior fit-out company Lincotrade & Associates for S$25 million.

Fabchem, which manufactures explosives, intends to pay for the acquisition by issuing new shares to Lincotrade's directors, which will result in a reverse takeover of Fabchem.

The purchase consideration of S$25 million is about 1.4 times the watch-listed company's market capitalisation. (see amendment note)

Some 113.6 million new shares valued at at S$0.22 apiece will be issued and credited as fully paid up to Lincontrade's three directors, Tan Jit Meng, Jackie Soh and Tan Chee Khoon as payment.

Consequently, the trio will collectively own up to about 68.2 per cent of Fabchem's enlarged issued share capital after the acquisition.

Some 5.68 million shares will also be allotted and issued to British Virgin Islands-based Prestige Fame, which arranged the deal. Fabchem said the arranger is an unrelated third-party.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Fabchem is also seeking to transfer to the Catalist board.

According to Fabchem's latest financial statements for the half year ended September 30, 2020, revenue rose 30.7 per cent to 74.5 million yuan (S$15.3 million). It made a gross profit of 24.1 million yuan but posted a net loss of 3 million yuan.

Fabchem said it will become a cash company after disposing 100 per cent of its stake in Shandong Yinguang Technology. This disposal, announced in March, amounts to about S$18 million.

This proposed acquisition is an opportunity for the Fabchem to acquire a new operating business to meet the Singapore Exchange's requirements of a new listing on Catalist, the company said.

Fabchem shares ended Thursday flat at 37.5 Singapore cents.

Amendment note: An earlier version of the article made an incorrect comparison to Fabchem's market capitalisation. It also excluded its net loss for the half year ended September 2020. The article has been amended to reflect this change.