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P99 scraps acquisition of Barito; unveils Chip Eng Seng subscription, new direction

EVEN as a proposed acquisition of coal infrastructure firm Barito Pte Ltd fell through, cash company P99 Holdings on Tuesday unveiled a new strategy of diversifying into the property business and manufacturing of construction materials.

In line with these, it announced a plan for construction and property group Chip Eng Seng to subscribe for new shares in the group, and also a new acquisition of two lightweight partition manufacturing companies in China.

P99, which has been in the process of acquiring Barito, said in an exchange filing that both parties have decided to mutually terminate the transaction as the vendors and new vendor had difficulties fulfilling the conditions of the deal by the long-stop date.

At the same time, P99 also entered into a letter of intent with Chan Tuck Cheong and Yang Yongbo, who together hold up to 75 per cent of Fujian Hubang Building Materials Technology and Quanzhou Yongbang Investment and Management Co. Both are engaged in the manufacturing of lightweight partitions.

Separately, Chip Eng Seng also entered into a letter of intent with P99 to subscribe for 505 million new shares, which could make up 70 per cent of P99's enlarged issued share capital. If completed, this will lead to the firm making a mandatory general offer for all remaining shares in P99.

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P99 said it will use the proceeds from the proposed subscription for the new acquisition, and the remainder for working capital needs.

In order to allow Chip Eng Seng to maintain its stake at up to 70 per cent of P99, the agreement also allows Chip Eng Seng to have an option to subscribe for up to 116.7 million more shares at eight Singapore cents each, should certain existing P99 shareholders subscribe for up to 50 million shares.

The proposed subscription is contingent on a few factors, including the Singapore Exchange granting a six-month extension to lift the "cash company" status of P99 to Nov 30 this year.

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