Rex shares actively traded on drone technology investment

Singapore

SHARES of Rex International were actively traded on Tuesday after the group said it would invest up to US$4 million in commercial drone company Xer Technologies.

As at 9.02am, the counter gained one Singapore cent or 5 per cent to hit its intraday peak of 21 Singapore cents amid heavy trading, with some 9.1 million shares changing hands.

As at 10.08am, the counter has seen 16 million shares worth S$3.2 million traded.

There were no married deals recorded, according to Shareinvestor data.

The oil and gas company said on Tuesday morning its investment comprises US$1 million for a 40 per cent interest in Singapore-incorporated drone company Xer Technologies, and a commitment to inject up to US$3 million in the company, subject to the achievement of certain technical and sales milestones within the next 18 months.

The agreement is also conditional upon Xer Technologies acquiring 100 per cent stake in UAV Development Sweden AB for 50,000 krona (S$7,865.58), which has its own in-house developed drones and is also a spin-off from a security company that uses drone technology.

The acquisition is part of Rex International's efforts to diversify from its core business of oil exploration and production, and will "bring the group a step closer towards its approved business diversification mandate to include sustainable solutions for energy production and materials used in various industries", the group said.

Rex International added that the move will allow it to have a stake in the global commercial drone market, which it expects will reach US$501.4 billion by 2028 and register a compound annual growth rate of 57.5 per cent from 2021 to 2028.

The group said that it will have the right to appoint two out of five directors to the board of Xer Technologies, and will also support the company with management personnel from the group.

Xer Technologies, which has yet to begin operations, is slating the in-house developed heavy-duty long-range drones to be commercially available in the fourth quarter of 2021. It plans to target clients in areas of infrastructure inspection, search-and-rescue operations, public safety and animal herding.

Rex International estimates the unaudited pro forma net asset value of Xer Technologies as at Dec 31, 2020 was approximately US$434,000. The total consideration of up to US$4 million represents 2.9 per cent of US$136.86 million, which is the group's latest net tangible assets as at Dec 31, 2020.

Shares of Rex International closed flat at S$0.20 on Tuesday.