Seroja Investments eyes RTO with acquisition of Denway Development for up to US$2b

SEROJA Investments has entered into a conditional sale and purchase agreement with Nickel Global Group and Denway Development to acquire Denway in a reverse takeover (RTO) for up to US$2 billion.

The deal is to be satisfied through the issuance and allotment of new ordinary shares in Seroja at an issue price of S$0.50 per share. An extraordinary general meeting will be called to put the proposed acquisition to a shareholder vote.

Hong Kong-incorporated Denway is a holding company which holds 75 per cent of the entire issued and fully paid-up share capital of Karyatama Konawe Utara (KKU) and Konutara Sejati (KS). KKU and KS own their respective open-pit nickel mines in the North Konawe region of Sulawesi, Indonesia. For FY21, Denway had a revenue of US$25.84 million and a net profit of US$2.35 million.

In conjunction with the proposed acquisition, Seroja also intends to undertake a share consolidation exercise, based on a consolidation ratio of 24 to 1.

In a filing to the Singapore Exchange on Friday (May 20), Seroja said: “The group is in discussion with a third party to explore the feasibility of a joint venture to construct a ferro-nickel smelter plant to maximise the commercial exploitation of the nickel and iron ores deposits in the mines owned by KKU and KS. The group also has plans to expand the production of mineral resources at the two mines.”

Seroja became a cash company in October 2020 and has been on the hunt for a new viable business in line with the SGX listing rules. SGX has extended the deadline for Seroja to enter into a definitive agreement to acquire a new listing that will meet the necessary requirements by May 20.

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Seroja highlighted that the proposed acquisition would give it the opportunity to acquire a majority stake in 2 mines with a “sizeable reserve of nickel ore”, and possibly the “third largest nickel ore reserve globally”. Nickel is used in the manufacture of lithium batteries, and the growing demand for lithium batteries has pushed up nickel ore prices.

Seroja added: “The board believes that the proposed acquisition will increase the value of the company and should enable the company to enhance shareholder value by generating investor interest in the shares. This prospect compares well with the alternate possibility of the company being delisted.”

Shares in Seroja are suspended from trading.