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Far East Group to buy air-con engineering firm with S$7m cash, share issuance
REFRIGERATION and air-conditioning seller Far East Group plans to buy air-conditioning company Tech Air-Con & Security Engineering for S$7 million in cash and 2.98 million shares to its current owners.
Those shares represent 2.75 per cent of the existing issued shares as at Monday and about 2.68 per cent of the enlarged shares.
Those shares will be priced based on its volume-weighted average price of the last market day on which shares are traded right before the date of completion. The number of shares to be issued falls within the limits of a share mandate in 2018 that allows the company to issue new shares not exceeding 50 per cent of the total number of issued shares.
Far East will also pay S$5.5 million to the owners of the company and an amount up to S$1.5 million across the fiscal years 2019 and 2020 based on a profit guarantee for M-Tech. This will be funded through internal resources of the group and/or bank borrowings.
M-Tech, owned by Quek Poh Chuan and Lee Sui Fook, does plumbing, non-electrical heating and air-conditioning engineering.
Far East said that the acquisition of the company will mean a more sustainable income stream as the group will increase its revenue from residential and commercial air-conditioning, and offer value-added services in the areas of energy-efficiency enhancement and building management services.
The group also sees potential in the commercial segment, and it would be able to move up the value chain with its mechanical and engineering capabilities.
The company last closed on March 1 at S$0.135.