Aspial to consolidate local retail jewellery units under subsidiary Maxi-Cash in S$100m deal

MAINBOARD-LISTED Aspial : A30 0% plans to inject its jewellery retailing business into its pawnbroking subsidiary Maxi-Cash Financial Services : 5UF 0%, in a deal worth up to S$99.8 million, the 2 companies announced on Thursday (Jul 7).

The consideration will comprise cash, a settlement of debt and the issuance of new shares, and will take Aspial’s stake in Maxi-Cash from 62.6 per cent to at least 71.8 per cent.

After the move, Maxi-Cash, which currently operates in pawn-broking, money lending and the sale and trading of pre-owned jewellery and branded merchandise, will be renamed Aspial Lifestyle, to reflect its expanded consumer lifestyle-related business. The new entity will include the Lee Hwa Jewellery and Goldheart jewellery retail chains.

Aspial is controlled by the Koh family. Koh Wee Seng, its chief executive officer, is also a director and controlling shareholder of the company, with a total stake (both direct and deemed) of 78.5 per cent, according to Aspial’s latest annual report. Most of his deemed stake is held through MLHS Holdings, which is jointly controlled with other family members.

Koh Wee Seng’s siblings, Ko Lee Meng and Koh Lee Hwee, are also directors and controlling shareholders of Aspial.

Last year, Aspial also privatised its real estate subsidiary World Class Global via a scheme of arrangement to simplify the group’s structure. All publicly held shares of World Class Global were transferred to Aspial for a consideration of S$36.3 million.

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The deal to inject the jewellery assets into Maxi-Cash will have a positive impact on the profitability of the pawnbroker.

The deal value is also S$34.2 million above the value of the assets on Aspial’s books, but there will be no gain or loss on the disposal to Aspial as the group will continue to consolidate the financial results of Maxi-Cash after the transaction is completed. Maxi-Cash will also remain an Aspial subsidiary.

As part of an S$87.8 million base consideration for the jewellery assets, Maxi-Cash will issue 311.7 million new shares at S$0.163 each for a total of S$50.8 million.

The other S$37 million comprises cash and a settlement of debt of up to S$22 million.

There is also an earn-out consideration of up to S$12 million: S$6 million to be paid in cash and S$6 million to be satisfied with the issuance of approximately 36.8 million new shares — assuming that the target companies record net profits of at least S$10 million in the financial year ending Dec 31, 2022. If the profit falls short, the earn-out consideration will be pro-rated. The aggregate value of the consideration, assuming the maximum earn-out consideration, would come to 47 per cent of Aspial’s S$212.3 million market capitalisation, and 57 per cent of Maxi-Cash’s market capitalisation of approximately S$175 million, before the deal was announced.

On a pro forma basis, assuming the transaction had been completed on Jan 1, 2021, Aspial’s loss per share would have been 0.12 Singapore cents, from a loss of 0.02 cents before.

Earnings per share for Maxi-Cash, however, would have increased to 1.95 cents from 1.39 cents, assuming the same condition.

Shares of Aspial ended Friday flat at S$0.098, while Maxi-Cash was up 1.2 per cent or S$0.002 at S$0.160.