Sino Construction to purchase 19.9% equity interests in Ardilaun Energy for S$12m

Sunny Cove now a wholly owned subsidiary.

The Board of Directors of Sino Construction Limited (Sino Construction) announced that it had, on 14 February 2014
entered into a sale and purchase agreement (SPA) with Hasan Sjafei in relation to the proposed acquisition of 50,000 issued and fully paid up ordinary shares of par value of US$1 each in the capital of Sunny Cove Investments Limited (Sunny Cove), representing 100% of the issued and paid up share capital of Sunny Cove as at the date of SPA.

As at the date of the SPA, Sunny Cove is the legal and beneficial owner of 1,990,000 issued shares (representing 19.9%) in the issued and paid up share capital of Ardilaun Energy Limited (Ardilaun), a company established in the Republic of Ireland.

The acquisition was completed on 14 February 2014 and Sunny Cove has become a wholly owned subsidiary of the company.

In rationalizing the purchase, Sino Construction said Sunny Cove holds 19.9% equity interests in Ardilaun and with its working interests in the Irish Sea and Celtic Sea for exploration of oil and gas, Ardilaun will have the opportunity to commence its exploration works during the year as well as immediate production revenues from 12.5% interest in Seven Heads Gas Field of Celtic Sea that has 5 wells producing since 2003.

"The acquisition of Sunny Cove will enable the Company to gain a foothold in the oil & gas business and further explore on other investment opportunities to diversify its existing business so as to bring in additional value to the Company and its shareholders," Sino Construction said.

The total consideration of S$12.0 million is based on arms-length negotiations and was arrived at on a willing-buyer willing-seller basis, after taking into consideration the prospects of Ardilaun, which includes, amongst others, its oil and gas asset portfolio and the estimated asset value after de-risking of the assets of up to US$860 million (or S$1.1 billion based on exchange rate of US$1:S$1.27). The company had not commissioned any valuation of Sunny Cove.

The consideration was satisfied on completion by the issuance by Sino Construction to the vendor of a promissory note payable in 6 months from completion. The company intends to fund the payment of the promissory note from the proceeds of the disposal of Daqing Xinyuan Construction Installation Co., Ltd and Daqing Sunshine Reli Thermal Co., Ltd, and/or through share placement or loans.