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Sincap to buy Orion Energy Resources for S$7.2 million in shares

SINCAP Group is acquiring a mineral trading and logistics management firm for S$7.2 million in shares to expand and grow revenues in resource trading.

The firm, Singapore-incorporated Orion Energy Resources, sources for coal from major traders and mine owners in Indonesia, and ships the commodity weekly to power plants owned by a state-owned enterprise in China.

It recorded profits of US$853,000 before tax from its incorporation date of Oct 3 last year till May 31; its unaudited net tangible assets as at May 31 amounted to US$860,000.

The acquisition will benefit the firm as it provides Sincap with opportunities to leverage on Orion's resources, including its network of customers, suppliers and business contracts, said Sincap.

"The board is also of the view that the business of the target company has growth potential, and that the proposed acquisition is expected to grow the revenue of the company's core business in mining and resources trading, and facilitate future expansion into the mining and resources trading industry," it said.

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Sincap will issue 133 million new shares at 5.4 Singapore cents each, representing a discount of 9 per cent to the volume weighted average price of shares traded on June 29. These consideration shares will represent about 27.3 per cent of the enlarged share capital of Sincap.

Further to this, if Orion achieves certain levels of profit targets up to S$5 million, Sincap would issue additional shares up to a maximum of 128.9 million shares. Including these additional shares, the total number of shares to be issued and allotted to the vendors would amount to 42.47 per cent of Sincap's enlarged share capital.

Orion Energy Resources is currently majority-owned by a Chinese businesswoman Wang Li who has a decade of experience in mineral trading in South-east Asia and China; Singaporean Choo Chin Lin, a current director in Orion, holds the remaining 16 per cent stake.

The trading halt on Sincap shares in place since Tuesday has been lifted; the counter will resume trading on Friday.

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