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Green Build buys columbarium niches in Seoul, raises S$2.4m in convertible bond issuance

GREEN Build Technology on Tuesday evening said that it has signed an asset purchase agreement with Yea Eun Columbarium to buy niches in Yea Eun Columbarium in Seoul, South Korea, with a ballpark indicative value of S$5.6 million.

The amount is subject to valuation. The company said it will commission Crowe Horwath First Trust Appraisal to conduct the valuation on the assets.The vendor is a South Korea incorporated private company in the business of managing the Yea Eun Columbarium in Seoul.

Green Build said it will issue to the vendor about 27.78 million new shares in the company amounting to S$5 million at S$0.18 each, which is the volume-weighted average price per share on the last full market day preceding the signing of the agreement. The number of shares to be issued for the acquisition makes up about one-tenth of the company's enlarged share capital. 

Green Build said it believes the acquisition is "beneficial" as it provides an additional revenue stream for the company, which has been exploring different additional revenue streams to increase its revenue for a period of time.

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"The company was approached by the vendor with a proposal to invest in the assets. The company notes that the vendor is offering a 10 per cent discount on the sale price relative to the valuation of the assets.

"The board has commissioned the investment committee to study the feasibility of such an investment and understands that the Korean government has been advocating cremation as an alternative to burials. There is also an increase in the need for cremation facilities due to the ageing population in the Republic of Korea."

It added that the assets are situated near Seoul and five other major cities, and is open to the public with no restrictions as to religion or community.

Green Build also has the option to require the vendor to purchase up to 50 per cent of the assets by way of cash payment at the price that it acquired them for. The put option is exercisable from the second-year anniversary of the completion of the deal. Upon completion, the vendor will also hold the assets for the company as an agent and help in selling the assets on the instructions of the company. 

Separately, Green Build has signed a subscription agreement with Kim Kwang Seun - a South Korean investor introduced to the company by a common business associate - who has agreed to subscribe for a convertible bond issued by the company with a principal sum of S$2.5 million.

Mr Kim is in the business of private equity investments. The interest payable is 6 per cent per annum on the outstanding bonds.

Assuming that the convertible shares are fully converted, the number of conversion shares will be 15.4 million, about 5.9 per cent of the enlarged issued share capital of the company.

After one year, the investor can convert 30 per cent of the bonds into shares at an initial conversion price of S$0.162, which is a 10 per cent discount to per-share price of the columbarium consideration shares; after two years, he can convert up to 100 per cent of the bonds.

Green Build said it chose to issue the bonds "to improve the company’s financial position". The estimated net proceeds from the issuance will be about S$2.4 million and will be used for the working capital purposes of the company.