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Sun, January 03, 2021 – 7:30 pm
LISTING ON THE MAIN BOARD Broadway Industrial Group entered into a conditional purchase and sale agreement to sell its entire actuator arm and related parts manufacturing business for $ 50 million.
The proposed arrangement to Chinese company Suzhou Gefan Hardware And Plastic Industrial Co requires approval from Broadway shareholders and will result in Broadway becoming a cash company.
Broadway non-executive director Lew Syn Pau and Lau Leok Yee, who collectively own a 41.2 percent stake, have pledged to vote in favor of the proposed provision.
If key shareholders object, Broadway will have to pay a fee of $ 2.5 million to the buyer, the company said in a statement to the Singapore Stock Exchange on Thursday.
Alternatively, if Gefan’s board objects, there will be a US $ 2.5 million payment from the Chinese company to Broadway.
The book value of the shares and assets in the proposed disposal is approximately US $ 33 million. The net proceeds of the disposal, taking into account all costs and expenses, including the costs of dismissal of employees, are estimated to be approximately US $ 43.9 million.
But the land and buildings where the Shenzhen manufacturing plant is located are not part of the assets for sale. And Broadway will have the right to lease 20,750 square meters of the property to Gefan at 20 yuan (S $ 4) per square meter per month for at least two years.
The Broadway board believes the $ 50 million price tag is “fair and reasonable,” and the deal presents a good opportunity to unlock shareholder value. Broadway, having strengthened its balance sheet, will be able to further explore the various options available, the board adds.
Shareholders should be aware that, under Rule 1018 of the Listing Manual, if the assets of a listed company consist entirely or substantially of cash or short-term securities, trading in its shares will normally be suspended.
Only until the company has a business that can satisfy the exchange’s requirements for a new listing will the suspension be lifted.
If you are unable to meet the requirements for a new listing within 12 months from the time you become a cash company, subject to any extension that may be approved by the stock operator, the company will be delisted.
Broadway shares closed at S $ 0.168 on Wednesday and requested a suspension of trading on Thursday morning before the markets opened.
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