World Precision to acquire Hainan tourism project for 160 million yuan
Mia Pei
WORLD Precision Machinery ’s wholly-owned subsidiary Hainan World Tourism Investment has entered into a share transfer agreement with two Chinese companies to acquire a to-be-incorporated project company.
The acquisition is intended to diversify the group’s earnings base, according to the group’s bourse filing on Sunday (Oct 8).
The project company, which will be incorporated by Zhejiang Haiti Investment Real Estate and Zhoushan Ailifen Building Materials, will hold certain assets and liabilities transferred from Hainan Xinglong Pearl Investment.
The assets comprise land use rights over an area of 52,668 square metres (sq m) in the Xinlong Hot Spring Tourism Zone of Wanning in Hainan, as well as built structures on the land including 40 hotel villa properties, plants, buildings and facilities.
Taking into account the current market value of similar parcels of land in the city, the consideration of 160 million yuan (S$30.2 million) is based on the pro forma net tangible asset (NTA) of the project company.
It will be paid via six transactions, funded by internally generated cash and bank borrowings.
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About 107.4 million yuan will be paid to the two sellers, and the remaining 52.6 million will be injected into the project company for the settlement of liabilities.
The first tranche payment of 12.5 per cent of the purchase price, or 20 million yuan, will be paid to the two Chinese sellers within five days from Sunday, the signing date of the share transfer agreement.
The final tranche payment will be paid within 24 months of the date, so long as no claims against the project company for any undisclosed liabilities arise, the group said.
At the start of the year, the group acquired Wanning Yinhu Hot Spring Holiday Hotel in the same zone at 155 million yuan, or 2,847.69 per sq m, marginally lower than the 3,037.89 per sq m of the land to be acquired in the proposed acquisition.
The effects of the proposed acquisition on the NTA per share and earnings per share of the group for FY2022 on a pro forma basis are insignificant. But the group noted that it does not reflect its future financial position upon completion of the acquisition.
World Precision said that the proposed acquisition is also conditional upon the approval of its shareholders at an extraordinary general meeting (EGM).
It will make further announcements on material developments of the acquisition and release a circular for the EGM.
Shares of World Precision were traded 8.9 per cent, or S$0.025, lower at S$0.255 as at 9.30 am on Monday.
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