Hot stock: Metal Component sees heavy trading, up 14% after share issue gets nod

METAL Component Engineering (MCE) was the second most traded security after the market opened on Thursday with 29.7 million shares traded as at 10.01am. Its share price also rose to a high of 6.4 Singapore cents, up 14.3 per cent or 0.8 cent as at 9.04am.

No married deals were recorded in early trade according to ShareInvestor data.

This comes after the metal stamping company announced in a bourse filing on Thursday that it had received the Singapore Exchange's in-principle approval to issue shares in relation to its proposed acquisition of Gainhealth, a healthcare business with 15 staff based in Singapore and Malaysia.

MCE announced in June that it would pay for shares of Gainhealth with S$3.8 million in cash and issue up to 13 million new shares at 3.7 cents per share.

In the filing, the company said that it had received in-principle approval to issue up to 13 million shares and up to an additional 20 million shares at 3.7 cents per share as part of the performance bonus payable to Gainhealth's sellers.

It was previously announced that separate to the sale price, a performance bonus of up to S$5.1 million will be payable to the sellers with cash and issuance of new shares based on the valuation of Gainhealth. The sellers will receive the bonus if the company obtains a valuation of S$11.6 million or more within a year of the sale closing.

MCE also said that the bonus formula would be adjusted if the valuation target is not hit.

Some 5.7 million and 6.9 million shares were also approved for issue at 3.7 cents per share as arranger and additional arranger shares respectively.

Earlier, it was also announced that the arranger for the deal, Tan Ker Sin, would receive S$212,500 worth of new MCE shares at 3.7 cents per share and hold 2.8 per cent of MCE's enlarged share capital post-acquisition as part of her fee.