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Axington proposes to change core business to medical, consumer wellness services
CATALIST-LISTED professional advisory services group Axington Inc on Wednesday proposed to change its name and core business, and acquire a Malaysian medical products distributor for S$12 million.
It also proposed a S$6 million share placement, a compliance placement, and a S$9.4 million two-for-one rights issue.
The company is looking to change its core business to the provision of medical and consumer wellness services, and investments in medical technology, robotics and artificial intelligence technology applications in the medical and consumer wellness space.
It currently provides advisory services, such as internal audit and quality assurance review, as well as strategy and risk advisory. Formerly known as Axcelasia Inc, it is now proposing a second name change to NETX Inc.
Earlier in June, Dorr Global Healthcare made a mandatory unconditional cash offer for all of Axington's shares, which closed on July 13 with Dorr holding a 92.5 per cent stake in Axington.
Dorr is owned by Nelson and Terence Loh, the founders of Novena Global Lifecare. Mr Nelson Loh told The Business Times last month that the pair had "plans" for Axington, and it was "a natural extension to list one of our businesses here".
In connection with its proposed change of core business, Axington on Wednesday also proposed to acquire Malaysian medical equipment and medical aesthetics products distributor Vesta Apex Trading for a consideration of S$12 million. This comprises a cash consideration of S$6 million and the issuance of around 33.3 million Axington shares at 18 Singapore cents per share.
The issue price represents a discount of 14.9 per cent to the volume-weighted average price (VWAP) of 21.1 cents for trades done on the Singapore Exchange (SGX) on July 13. This is the last traded closing price on the market day preceding the date of a conditional sale-and-purchase agreement signed with seller Ng Shing Lay.
The consideration was arrived at after arm's length negotiations, Axington said. The acquisition will be funded using the company's internal resources.
Axington added that the proposed acquisition will kickstart its proposed core business change and pave the way for its expansion into the medical and consumer wellness sector.
The company said it selected Vesta Apex Trading as its initial foray into the medical and consumer wellness sector on Vesta's "attractive" business model in the medical technology sector in South-east Asia, and "strong" order book in its medical equipment distribution business.
Axington on Wednesday also proposed a S$6 million share placement of 30 million new ordinary shares at 20 cents per share, and a compliance placement of 150,000 new shares at the same price to restore its free float.
The placement share price is equivalent to a discount of 5.39 per cent to the VWAP of 21.1 cents for SGX trades on July 13. Axington on July 28 signed conditional subscription agreements with nine placees for the subscription shares.
Axington also proposed a renounceable non-underwritten rights issue of up to around 95.2 million new ordinary shares at 10 cents per share, on a one-for-two basis, to raise an estimated S$9.4 million.
The rights issue price represents a 52.7 per cent discount to the VWAP of 21.1 cents for SGX trades on July 13.
Axington added that Dorr had given an irrevocable undertaking to subscribe and pay in full for its entitlement of 74.2 million rights shares, and subscribe and pay in full for all remaining rights shares not taken up by other shareholders.
Axington intends to use 60 per cent of the gross proceeds from the placement and rights issue for business investments and "opportunistic" acquisitions, and 40 per cent for general working capital.
In the event it is not able to identify and acquire suitable acquisition targets, the proceeds shall be redeployed for potential future acquisitions and/or for working capital, it said.
Axington said the placement, compliance placement and rights issue will increase the number of its shares in issue by about 125.4 million shares, or about 78.2 per cent of its existing issued share capital.
This increase is expected to improve the trading liquidity of the shares on the Catalist board and provide the company with increased visibility within the investment community, it added.
The company will seek shareholders' approval in relation to four proposed resolutions (its name change, change in core business, proposed acquisition, and allotment of new shares to the seller) at an extraordinary general meeting to be convened.
It said the four proposed resolutions are inter-conditional, and that if any of the proposed resolutions are not approved by shareholders, the other proposed resolutions will not be duly approved.
Shares of Axington have been suspended from trading from July 27. They last traded at S$0.22 on July 13.