Memstar terminates RTO sale and purchase agreement with Longmen, vendors

MEMSTAR Technology on Thursday said it has terminated the proposed acquisition of Longmen Group Limited by way of a proposed reverse takeover (RTO) of Memstar Technology.

Longmen Group had "failed to fulfil certain deliverables" under the RTO sale and purchase agreement (SPA), Memstar Technology said.

To the best of Memstar Technology's knowledge, Longmen Group was facing fundraising challenges, Memstar Technology added. "If it (Longmen Group) failed to raise additional funding, this may impact its ability to repay the US$5 million refundable deposit previously advanced by Memstar Technology to Longmen Group, under the RTO SPA."

Memstar Technology said that it has written to Longmen Group and vendors to notify them that unless they were able, within three working days of the date of the letter, that is, by April 6, 2016, to clearly establish that there was no breach of the aforesaid conditions under the RTO SPA, Memstar Technology would treat the RTO SPA as terminated, require the repayment of the US$5 million refundable deposit and look to the vendors for indemnification of any loss suffered by the company.

As at Thursday, Longmen Group and vendors have not responded, said Memstar Technology.

The latter is now in discussions with professional advisers on the appropriate further course of action. It is also restarting its efforts to source for a suitable business to be acquired to enable it to meet its obligations as a cash company under the mainboard rules and intends, in the meantime, to apply to the Singapore Exchange for a further extension of time to facilitate these efforts.