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Vietnamese investors to inject shipyard asset, take substantial stake in EMS Energy
OFFSHORE and marine engineering company EMS Energy has entered into a binding memorandum of understanding (MOU) to acquire a 52.76 per cent stake in Vietnamese shipyard Nosco Shipyard Joint Stock Company for an expected S$16.6 million in shares.
The Nosco stake are being sold by NVS Holdings, a company controlled by EMS chairman and chief executive Ting Teck Jin and Vietnam investment firm Claymore Investment Co; and by Son Truong Co, a family-owned Vietnamese construction company. The remaining 47.24 per cent interest in Nosco will remain in the hands of parties unrelated to the vendors.
The consideration for the stake will be satisfied by the issuance of 11.06 billion new EMS shares to the vendors. Based on the indicative consideration value, that would set an issue price of about 0.15 Singapore cent per new EMS share. Trading in EMS shares is currently suspended, and the stock last changed hands at 2.2 Singapore cent in September 2016.
The new shares will represent a 96.1 per cent stake in the enlarged share capital of EMS. That will lower Mr Ting's direct and deemed interest in EMS from the current 79.54 per cent to about 52.42 per cent of EMS's enlarged share capital. Claymore will hold a 30.23 per cent stake in EMS, and Son Truong will hold a 16.56 per cent stake. Existing EMS minority shareholders will hold about 0.8 per cent of the enlarged share capital.
Vietnam-based Nosco owns 100 hectares of industrial land with a 50-year lease, of which 50 hectares are currently used for the repair, construction and recycling of ships and other marine assets. The remaining 50 hectares of land will potentially be used for expansion and other projects to support industrial development. The shipyard posted net profit of 11.65 billion Vietnamese dong (S$678,403) in 2017.
Completion of the deal is slated for April 15, 2019. Because it counts as an interested party transaction and a very substantial acquisition, shareholder approval is required. The parties will also seek a waiver from having to make a mandatory general offer for EMS Energy.
Shares of EMS Energy have been suspended from trading since September 2016, as it needed to address financial and business viability issues, while also ensuring its operational ability. SGX had granted various extensions to EMS Energy to resolve these issues with its investors, with the latest deadline being Dec 31, 2018.
The company said it believes the proposed acquisition will potentially resolve its viability and operational issues. While the acquisition remains ongoing, it will request for a further extension from SGX to submit a formal proposal to resume trading.