KUALA LUMPUR: SIG Gases Bhd has entered into a memorandum of understanding (MoU) to buy the entire equity interest in Piasau Gas Sdn Bhd (PGSB) from several parties.
In an announcement to Bursa Malaysia, SIG said the MoU was entered between the parties today to acquire full control of PGSB, which is involved in the manufacturing, distribution and marketing of industrial gases, as well as the provision and maintenance of welding equipment and machinery.
Under the MoU, SIG would acquire the equity interest from Shin Yang Corp Sdn Bhd, Tan Sri Ling Chiong Ho, Ling Chiong Sing, Geo Sepadu Sdn Bhd, Pui Voon Poh and Hong Ken Choon.
Chiong Ho is the chairman of Shin Yang Shipping Corp Bhd (Syscorp), while Chiong Sing is the managing director of Syscorp.
The proposed acquisition is conditional upon SIG being satisfied with the results of the financial and legal due diligence on PGSB and the terms and conditions of the deal being acceptable to both parties.
It is also conditional upon the completion of SIG’s proposed renounceable two-call rights issue of 37.5 million new ordinary shares of 50 sen in SIG, on the basis of one rights share for every four existing SIG shares held on an entitlement date to be determined later, at an issue price of 50 sen per rights share.
The first call of 36 sen per rights share is payable in cash and the second call of 14 sen per rights share is to be capitalised from the share premium reserve of SIG.
The proposed two call rights issue is not conditional upon completion of the proposed acquisition of PGSB.
The purchase price for the deal will be based on the price earnings ratio of nine times of PGSB’s net profit for the financial year ended June 30, 2014, which may be adjusted depending on the outcome of the due diligence review.
The issue price of the SIG shares will be based on the five-day volume weighted average market price immediately before the date of the signing of the MoU, and will be adjusted for the proposed two call rights issue.
SIG is granted exclusivity in the deal from the date the MoU is signed until Nov 30.
In the announcement, SIG advise shareholders and potential investors of SIG to exercise caution when dealing in SIG shares, as there is no certainty that the proposed acquisition may proceed or result in a binding agreement.
Phoenix SIG Holdings Sdn Bhd is the single largest shareholder in SIG with a 35% stake, followed by SSB Cryogenic Equipment Pte Ltd 6.91%.