WE Holdings to acquire land reclamation firm for $25m

The firm has ongoing projects in Singapore and Brunei.

Mainboard-listed WE Holdings has entered into a non-binding memorandum of understanding for the proposed acquisition of land reclamation business Hua Kai for a consideration of $25 million.

Hua Kai is primarily engaged in the trading of sand, dredging and supply of processed sand needed for land reclamation activities in the South East Asia region, and has ongoing projects with partners in Singapore and Brunei. 

WE Holdings will pay $8 million in cash and $2 million in shares of the company to the vendor Koh Lee Hoo, upon the signing of the sale and purchase agreement, provided due diligence determines that the net tangible asset of Hua Kai and its affiliates is no less than $10 million.

Koh Lee Hoo shall provide a personal guarantee for the profit guarantee that Hua Kai achieves a net profit of S$6 million per year for its financial year end of 2016, 2017 and 2018.

The remaining $15 million may be paid over a three-year earn-out period, subject to conditions relating to Hua Kai’s net profit performance for the 2016, 2017 and 2018 fiscal years.