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Matex International plans to buy Blackgold Holdings HongKong in a S$475 million reverse takeover which will see the Singapore-listed company become an operator of four underground thermal coal mines in Chongqing, China.
Matex, a dye maker for the textile industry, has entered into a legally binding Heads of Agreement on Dec 30, 2014 with Blackgold International Holdings - the Australian-listed company which owns Blackgold Holdings HK.
If successful, Matex will end up owning four mines which have a combined ore reserves (proved and probable) of 100.7 million tonnes.
Matex said "while the group returned to profitability in the financial years ended 31 December 2013 and 31 December 2014, the Board expects the business of the group, being the manufacturing, formulating and sale of specialty chemicals focusing on dyestuff and auxiliaries for the textile industry, to remain competitive and challenging in the near future in light of, inter alia, rising operational costs''.
It expects demand for energy to increase in tandem with the continuation of China's economic development.
"The proposed acquisition will provide an opportunity for the group to venture into the energy sector, and participate in coal mining and trading in the PRC, for the benefit of the company and its shareholders,'' it added.
An extraordinary general meeting will be held to get shareholders' approval for the planned RTO and related matters.
Under the conditional sales and purchase agreement, Matex will pay S$25 million of the acquisition costs in cash, and the rest of the S$450 million, subject to adjustment, in shares.
Matex is also planning a share consolidation, at a ratio to be determined, for the purposes of compliance with the listing manual or the Catalist rules.