Citicode proposes to buy Livingstone Health for up to S$72m in RTO

MAINBOARD-LISTED Citicode has proposed to acquire Livingstone Health, formerly known as Ardmore Medical, for up to S$72 million in a transaction that will constitute a reverse takeover (RTO) if completed.

The deal price comprises a base consideration of S$47 million and deferred consideration of S$25 million, to be paid in cash and shares.

Citicode has entered into a conditional sales-and-purchase agreement with vendors Livingstone Health Consolidated, ICH Capital, Dax Ng Yung Sern and Chua Hshan Cher, according to a regulatory update on Wednesday.

As part of the proposed deal, Citicode will first consolidate its shares by a ratio of 500 existing shares to one, reducing its shares outstanding from 41.3 billion to 82.6 million.

It will then issue up to 342.5 million new consolidated shares at S$0.20 per share to Livingstone's vendors. After issuing the new shares to the vendors, including for the full deferred consideration, Citicode will have an enlarged share capital of 425.1 million outstanding shares.

Citicode plans to then transfer its listing status to the Singapore Exchange's Catalist board, from the mainboard.

Citicode said it needs to consolidate its shares on this scale to facilitate commercial discussions and execute the RTO. It has a market capitalisation of S$41.3 million based on its last closing price of 0.1 Singapore cent on July 22.

Singapore-based Livingstone offers specialist healthcare services including orthopaedic surgery, anaesthesiology and pain management, aesthetics and wellness, cardiology and family medicine. In 2019, the company then known as Ardmore Medical withdrew its proposal to list on Catalist due to developments relating to its business operations, as well as changing market conditions.

The proposed RTO will offer Livingstone a capital market platform to reposition itself for growth opportunities in Singapore and Asean, according to Citicode's press statement on Wednesday.

Citicode had previously entered into discussions with Livingstone to evaluate design and consultancy services for the development of a new Asean medical centre.

Citicode executive chairman and chief executive Teh Wing Kwan then considered the possibility of acquiring the medical group after sensing an opportunity to strengthen the strategic partnership to provide integrated healthcare and engineering consultancy services.

This comes as Citicodes seeks to expand and diversify into the fast-growing healthcare sector in Singapore and Asean, it said in the statement.

"With disruptions due to Covid-19 and an imminent recession, Citicode's commodities-trading activities face additional uncertainty, while its mechanical and engineering projects have to contend with long gestation periods and supply-chain disruptions," Mr Teh said.

He added the proposed deal can contribute to a sustainable turnaround for Citicode, improve financial performance, reposition Citicode for future fund-raising and mitigate risk associated with its current businesses.

Citicode will in due course provide details of an extraordinary general meeting to seek shareholder approval on the proposed RTO.

SAC Capital has been appointed as the financial adviser of the proposed transaction.

Trading in shares of Citicode has been halted since Monday and will resume on Thursday, the company said.