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Hatten Land to acquire 20% stake in digital asset exchange ECXX Global for US$6m
PROPERTY developer Hatten Land on Monday evening said it has entered into conditional agreements to acquire a 20 per cent stake in ECXX Global, which provides digital asset exchange services in Singapore, for some US$6 million.
The Catalist-listed firm has entered into a conditional sale and purchase agreement with existing shareholders of ECXX to acquire 19,809 ECXX shares, representing an 18.54 per cent stake in the company. Hatten Land has nominated its indirect wholly-owned subsidiary Hatten Technology to hold the ECXX shares.
The existing shareholders of ECXX are: investment holding companies CapitalX Global (72.67 per cent), Epsilon Investment (9.5 per cent) and Ariki Asia (8.55 per cent); information technology consultancy ChainUp (5 per cent); as well as Lee Chin Foong (4.27 per cent), who is the sole director and the chief executive of ECXX.
Another conditional share subscription agreement has been entered into between Hatten Technology and ECXX to subscribe for 1,557 new ordinary shares in ECXX, representing a 1.46 per cent stake of its enlarged share capital, following the issuance of the new shares.
ECXX's largest shareholder CapitalX Global has also agreed to grant an option to Hatten Technology to acquire up to 33,115 shares, or 31 per cent of the enlarged issued and paid-up share capital of ECXX, as at the completion of the share subscription agreement, at a price to be determined.
Upon completion of the proposed acquisition, Hatten Land may nominate its representatives to be appointed as directors representing no more than one third of ECXX's board of directors.
The purchase consideration of US$6 million will be satisfied by the allotment and issuance of Hatten shares, as well as US$354,930 in cash, payable over two years on a monthly installment of S$21,000.
Hatten Land will issue 100.2 million new shares at an issue price of eight Singapore cents per share, representing a 29.66 per cent premium to the weighted average price of 6.17 cents for trades done on June 26. The Hatten shares represent 6.98 per cent of the existing share capital of the company, or 6.53 per cent of its enlarged share capital.
These shares are subject to a moratorium, where the vendors are not to dispose of any shares for three months from the date of listing of the Hatten shares on the Singapore bourse. Thereafter, they shall only be allowed to dispose of up to 25 per cent of their shares every three months.
ECXX has an issued and paid-up capital of US$5.8 million comprising about 105,000 shares as at June 29. Its digital asset exchange, ecxx.com, which is built on blockchain technology, allows both professional traders and retail investors to buy, sell and store digital assets.
Its digital exchange platform is also integrated with Singapore government identity platform, MyInfo. For the year ended Aug 31, 2019, ECXX reported a net asset value of US$2.4 million and a loss before tax of US$1.2 million, based on its audited financial statements.
Hatten Land's board has considered that the proposed acquisition will "provide it with immediate access to the technology and strategic human capital of ECXX, as opposed to the company developing such capability in-house, which may be more timely, costly and uncertain in terms of execution", it said.
With the proposed deal, the group can expedite its digital vision for Melacca, which will integrate the group's traditional brick and mortar business onto a digital platform. The structure of the purchase consideration also allows the group to use minimal cash funds, with an added option to potentially obtain a majority stake in ECXX subsequently, Hatten Land said.
As at 4.30pm on Tuesday, shares in Hatten Land were trading at 6.1 Singapore cents, down 0.8 cent or 11.6 per cent.