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OLS Enterprise to acquire Malaysian Phosphate Additives in S$300 million reverse takeover

OLS Enterprise, an investment holding company on the Singapore Exchange's (SGX) Watch-List, on Wednesday announced its proposed acquisition of Malaysian Phosphate Additives (MPA) via a S$300 million reverse takeover. This comes less than a week after the company announced plans to transfer from the SGX Mainboard to the Catalist board.

OLS had on May 22 entered into a term sheet with the vendors - Malaysia Technology Development Corporation, Right Earth, Casa Lite and Lim Lee Wan - to acquire the entire issue and paid up shares of MPA, it said in a note on Wednesday.

MPA is a Malaysian company engaged in manufacturing and marketing Di Calcium Phosphate and Mono-Di Calcium Phosphate - two inorganic ingredients used in manufacture of nutritional feed for livestock and fertilisers. MPA also owns 40 per cent of the issued and paid-up share capital in Malaysian Phosphate Additives Sarawak (MPAS), through its wholly-owned subsidiary, Malaysian Phosphate Venture.

Meanwhile, MPAS is currently building South-east Asia's first integrated RM1.5 billion (S$556 million) phosphate complex, which will produce a wide spectrum of phosphate and other products for agricultural, food and industrial use. When completed, the plant will produce approximately 500,000 metric tons per annum (mtpa) of phosphate products and is expected to generate sales revenue in excess of RM2 billion per annum.

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Koo Ah Seang, executive chairman of OLS, said the proposed acquisition is an opportunity for the company's shareholders "to participate in South-east Asia's flourishing population and consumption trends via a leading producer of phosphorus-based nutrients to support the growth of the region's food resources in partnership with an established and recognised group of corporate shareholders in MPA".

The aggregate consideration of the proposed acquisition is to be satisfied in full through an allotment and issue of OLS shares at an issue price to be determined by the company and the vendors. Terms of the share purchase agreement and ancillary agreements will also be agreed upon by both parties no later than two months from the date of the term sheet, OLS said in a note. The long-stop date for the proposed acquisition is nine months from the date of the share purchase agreement, OLS added.

Separately, OLS said it will enter into an agreement with MPA to inject RM10 million worth of convertible notes, which carries an interest rate of 3 per cent per annum, and will be fully convertible into MPA shares representing a shareholding interest of 5 per cent in the enlarged share capital of MPA upon successful completion of the proposed acquisition.

In order to allow the vendors to maintain the stipulated minimum shareholding of 70 per cent, OLS added that it will, at the completion of the proposed acquisition, issue to the vendors free new warrants representing approximately 70 per cent of the enlarged number of warrants issued by the company and outstanding upon completion of the proposed acquisition. The new warrants shall be exercisable into new shares in the event that the existing warrants are exercised into shares by the existing warrant holders of the company.

The vendors intend to apply for a waiver of their obligation to make a general offer, as they will own more than 30 per cent of the enlarged share capital of the company upon completion of the proposed acquisition, OLS said.

The proposed acquisition is subject to approval from SGX and OLS shareholders at an extraordinary general meeting to be held.

On Wednesday, pending the announcement of the proposed acquisition, trading of OLS' shares were halted. The counter last traded at S$0.007.