Hisaka Holdings to acquire Regal International for S$127.25m

Acquisition central to its diversification to property.

In an announcement to the Singapore Exchange, the Board of Directors of Hisaka Holdings Ltd. announced that it has entered into a conditional sale and purchase agreeement (SPA) for the proposed acquisition by the company of the entire issued and paid-up share capital of Regal International Holdings Pte. Ltd. (Regal International).

The SPA was entered into with vendors Mr Su Chung Jye, Mr Wong Pak Kiong, Mr Low Yew Shen and Ikram Mahawangsa Sdn Bhd.

Under the SPA, Regal International will be a holding company of, amongst others, Regal Capital.

As at the date of this announcement, Regal International has an issued and paid-up share capital of S$10,000 comprising 10,000 ordinary shares.

The Company shall purchase the Sale Shares from the Vendors for an aggregate consideration of S$127,250,000 to be satisfied by way of S$20 million in cash and the remainder by way of the allotment and issuance of the Consideration Shares.

In discussing the rationale for the proposed acquisition, the directors of Hisaka Holdings said they believe the deal should propel the company's growth through diversification.

"Although the Group had been profitable in the previous financial years ended 30 September 2012 and 2013, it recorded slim net profits after tax of approximately S$0.4 million for each financial year. The Board believes that the core industry sector in which the Group operates, being the semi-conductor sector, has been volatile and challenging, and will continue to remain so with no imminent signs of recovery," said the Hisaka Holdings directors.

"While the Group continues to deliver a healthy balance sheet, the Board expects the financial year ending 30 September 2014 to remain challenging for the Group. The Company believes that the Proposed Acquisition represents a good opportunity for the Group to expand and diversify its businesses and operations, which will allow it to achieve more consistent and sustainable financial growth.

"The Proposed Acquisition, if successful, will augment the existing business of the Group and will provide the Group with the opportunity to participate in the property development business. It is expected that the business potential and prospects of the Company will improve. Furthermore, the future plans of the Target Group Companies involve the expansion of its current property development business in Kuching, Sarawak and expansion of its property development business to other areas outside Kuching, Sarawak. This would further enhance the prospect for the Group.

The Company also believes that the Proposed Acquisition will be beneficial for the Group as, following the issue of the Consideration Shares, the Company’s market capitalisation will increase substantially, which will potentially widen the investor base and lead to an overall increase in investors’ interest and trading of the shares of the Company," they concluded.