SHC Capital is poised to turn into a medical device business through the reverse takeover of Tong Da Medical Device.
The firm, a cash company since the sale of its insurance business last August, will fulfil the consideration of S$120 million through the issuance of shares at S$0.07 apiece to Tong Da's owners.
They include Labuan-incorporated trusts held for the benefit of Tong Da's group CEO Cui Keshan, its group head of research and development Meng Guangshou and his wife, and other individuals.
Tong Da produces and sells medical equipment in China, and also conducts research and development.
The consideration represents a price-to-earnings ratio of 10 times Tong Da's net profit before tax for the year ended Dec 31, 2014. The group made 47.3 million yuan (S$10.3 million) in net profit on 119 million yuan in revenue for the 2014 financial year.
As part of the acquisition, SHC Capital will also conduct a share placement to raise S$20 million and to meet the minimum shareholding spread requirements by the Singapore Exchange.
SHC Capital faces the prospects of being removed from the Catalist board if it is unable to meet the requirements for a new listing within 12 months.