Axington seeks time extension, warns exit offer ‘highly unlikely’ if Achieva acquisition falls through

CATALIST-LISTED Axington Inc has requested to have up till Sep 30, 2023 to complete the acquisition of Achieva Technology, a deal that was meant to result in a reverse takeover (RTO).

In a bourse filing, the company said it had made the application to the Singapore Exchange (SGX) on Friday (Sep 16) pending the completion of several work streams, including internal audit and due diligence works.

In building the case for the extension, the company warned that any cash exit offer to shareholders will be “highly unlikely” in the event it is not granted the time extension and will be delisted. 

This is because receivers of all the shares owned by Dorr Global Healthcare International are supportive of the acquisition and had executed irrevocable undertakings to vote in favour of it. The Dorr shares represent 79.44 per cent of Axington’s issued share capital.

“Given that the receivers represent the largest shareholding block in the company, it is highly unlikely that any exit offer will materialise,” Axington said.

With this, Axington’s board views the resumption of trading upon completion of an RTO as the best outcome for its minority retail investor shareholders, and has therefore sought SGX’s consent to proceed with the acquisition, it added.

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Achieva is a wholly-owned subsidiary of Serial System, whose shares are listed on the SGX mainboard.

As to why the time extension is warranted, Axington said work for Achieva’s audit would only be able to start after Dec 31, 2022 at the earliest. A circular would have to be despatched to shareholders in connection with the RTO as well, it added.

Despite the delay, the filling states that the board “believes that there is a good chance” that the acquisition will proceed to completion. 

“It should be noted that this is the first time the company has entered into definitive agreements relating to an RTO which is binding,” it added. 

It also noted that the parties had already expended considerable time, resources and effort, including the appointment of WongPartnership, to advise on the acquisition, given the tight timeline faced by Axington.

Axington, meanwhile, stressed that the acquisition ascribes a S$5.5 million valuation on the company, which is higher than its net tangible assets of after the cash distribution. 

“As such, all shareholders, including minority shareholders, would stand to benefit from the Achieva acquisition, especially if compared against a liquidation scenario,” it said.

Shares of Axington last traded at S$0.19 before suspension. Serial System shares closed up 5 per cent at S$0.10 before Friday’s announcement.