Tee International to sell Tee Land stake to Amcorp for S$50.62m

Singapore

MAINBOARD-LISTED Tee International has entered into a conditional agreement to sell its 63.28 per cent stake in Tee Land to a unit of Malaysia's Amcorp Group for S$50.62 million in cash, or S$0.179 per share.

Separately, Tee International's former chief executive Phua Chian Kin has also entered into a conditional agreement with Amcorp to sell his 5.5 per cent stake in Tee Land, comprising about 24.6 million shares, at the same price, the company said in a Monday bourse filing. (see amendment note)

The S$0.179 price represents a 9.1 per cent premium to the S$0.164 closing price of Tee Land on Jan 8, and a 5.9 per cent premium to the last transacted price on Jan 9, prior to a trading halt. The sale is expected to be completed by April 13.

Excluding expenses, Tee International expects net proceeds of S$48.27 million from the sale of its Tee Land stake. It plans to use the cash to reduce its leverage, improve working capital, or for other strategic investments. The divestment will also help it focus on the core engineering business, Tee International said.

After the sale, Tee International will also enter into agreements with Tee Land to purchase Tee Industrial and for certain transitional services. The Tee Industrial acquisition will require shareholder approval at an Extraordinary General Meeting (EGM).

Once the conditions of the agreement are fulfilled, Amcorp will make a mandatory unconditional cash offer for all the remaining shares in Tee Land not presently owned, at the same price of S$0.179 per share. Amcorp intends to maintain Tee Land's SGX listing.

"The disposal of our stake in Tee Land will help to improve Tee Group's financial position ... We can also make strategic investments or acquisitions," said Eric Phua, the interim chief executive of Tee International, who took over from Mr Phua who was relieved of his role as chief executive and managing director in September last year. Shares of Tee International last traded at S$0.064 before the trading halt, while Tee Land shares traded at S$0.169.

Amendment note: An earlier version of this article incorrectly stated that Phua Chuan Kin's 5.5 per cent stake in Tee Land comprises 25.6 million shares. It is in fact 24.6 million shares. The article above has been revised to reflect this.