Lereno Bio-Chem shoots for third RTO attempt as second one falls through

Singapore

CASH company Lereno Bio-Chem has been unsuccessful in its second reverse takeover (RTO) attempt after its sales agreement with Kenyalang Property Development Sdn Bhd fell through.

However, it has gone on to ink a new RTO pact with Knit Textile and Apparel.

"The company and Kenyalang Malaysia have mutually agreed to terminate the sale and purchase agreement (SPA) with immediate effect pursuant to a deed of termination entered into on Sept 27," Lereno Bio-Chem said in a release to the Singapore Exchange on Friday. "The parties have discussed and decided that mutual termination of the SPA would be in the respective best interests of the parties."

In a separate release, Catalist-listed Lereno Bio-Chem said that it, together with Lim Siau Hing @ Lim Kim Hoe, have entered into a conditional put and call option agreement also dated Sept 27. Under the agreement, Lereno Bio-Chem is proposing to acquire Singapore-incorporated Knit for around S$26.4 million to be fulfilled via the issuance of new shares in Lereno Bio-Chem at S$0.01 per share.

If this comes to fruition, it would be its third RTO attempt. Prior to this, it had announced that it was planning to buy Malaysian property developer Majubina Projects.

Knit is a private company with an issued and paid-up share capital of S$2 comprising two ordinary shares owned by Mr Lim. Under the agreement, Mr Lim will undertake a restructuring under which Knit will acquire the following companies: Knit Textiles Mfg Sdn Bhd, Ocean Art & Embellishment Sdn Bhd, Moon Apparel (Cambodia) Co, Callisto Apparel (Cambodia) Co and Xentika.

These companies - which are controlled by Mr Lim and his family - are primarily in the business of contract manufacturing of apparel in Malaysia and Cambodia, and are currently in the process of expanding upstream into the knitting, dyeing, printing and finishing of fabric.

Mr Lim will hold approximately 80.2 per cent of the enlarged issued share capital of Lereno Bio-Chem once the deal has been completed.

"The board ... believes that (Knit's) business would provide the company with the necessary recurrent business activities going forward and to meet the requirements for a new listing," said Lereno Bio-Chem, adding that it would also create shareholder value and strengthen the balance sheet.

The company has been a cash company since Nov 17, 2015. Under Catalist rules, SGX will remove a company from the official list if it is unable to meet the requirements for a new listing within 12 months; Lereno Bio-Chem had received an extension until Feb 15, 2018 to complete the Kenyalang acquisition.

"The company will be consulting with SGX on the continued validity and applicability of the extension," it added.

An extraordinary general meeting will be called to get shareholders' approval for the proposed acquisition.