Chaswood tries again for RTO, this time with HK battery tech company for US$500m

MALAYSIAN restaurant operator Chaswood Resources Holdings on Thursday (Nov 25) signed a binding term sheet to acquire battery maker HK Aerospace Beidou New Energy Technology (HKAB) for an indicative price of US$500 million.

If completed, the transaction is expected to result in a reverse takeover (RTO) of Chaswood.

The term sheet was signed with Techna-X Berhad, a Malaysian-listed company which owns a 50 per cent stake in HKAB, as well as directors of HKAB, who collectively own the remaining 50 per cent stake in the company.

Chaswood plans to buy HKAB for 100 per cent of the latter's valuation, which will be conducted by an independent valuer.

To pay the consideration, Chaswood will issue shares at US$0.028 per share, equivalent to S$0.038 per share, which is at a 322 per cent premium over its closing price of S$0.009 before the trading suspension on June 18, 2018.

HKAB and Chaswood will adjust the acquisition price if required, to allow a compliance placement to take place concurrently at the same issue price per share. Based on the US$500 million indicative price tag, Chaswood will issue some 17.86 billion consideration shares.

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Chaswood and HKAB have agreed to each bear their own costs and expenses in relation to the acquisition, which is subject to the relevant director, shareholder and regulatory approvals.

The Chaswood group is undergoing a restructuring exercise and has entered into a scheme of arrangement with its creditors. The last extension of time for it to submit proposals to resume trading was June 15, and the scheme of arrangement also expired on June 30.

"To rebuild shareholder value, the company has been seeking an appropriate business to be injected into the group. The company is of the view that the proposed acquisition will place the company in a position to expand into new business areas and grow revenues, both of which will help rebuild shareholder value," said Chaswood.

Chaswood noted that Hong Kong-incorporated HKAB is the first and only company in the world to use rare metal ruthenium base in its ultra-capacitor as well as a complete patent field and strategy in ruthenium ultra-capacitor technology to develop its own proprietary systems.

HKAB owns the intellectual property, global marketing and distribution rights of the ultra-capacitor technology to a range of industries for energy storage and ruthenium Super Batteries.

HKAB manufacturing operations are in China. It also undertakes further research and development in international collaborations related to the ultra-capacitor technology.

The directors of HKAB are Dr Wan Muhammad Hasni Bin Wan Sulaiman, Nong You Hua and Satriya Bin Suetoh.

Chaswood said that as at Nov 25, it has not been provided with any financial information on HKAB. Chaswood will announce such information if and when a definitive agreement is signed.

HKAB and Chaswood agreed on a "best endeavours basis" to ink a definitive agreement within 90 days from Nov 24, the date of the term sheet.

Earlier in August, Chaswood had intended to acquire battery maker 3DOM (Singapore) Pte Ltd (3PL) via a RTO of at least US$1 billion.

The proposed transaction would have seen Chaswood buy 3PL for 70 per cent of the latter's valuation, which Chaswood intended to fund by issuing new shares.

However on Nov 15, both parties had mutually agreed to terminate the transaction after experiencing "significant differences in perspective and approaches" regarding how the deal should be implemented.

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