Europtronics plans share consolidation, new share issuance to fund acquisition

Singapore-listed Europtronics is proposing a share consolidation as part of its plan to fund a reverse takeover of gold mining company Gold Impact.

Europtronics will undertake a 7-into-1 consolidation, where shareholders will receive one new consolidated share for every seven ordinary shares they currently hold, the company said on Wednesday.

The process, also known as a reverse stock split, will reduce the number of Europtronics shares in issue while increasing the value per remaining share.

After the share consolidation is completed, Europtronics will then issue 320 million new consolidated shares at 50 cents apiece, raising $160 million for the acquisition of Gold Impact.

Singapore Exchange listing rules state that the issue price of new shares cannot be lower than 50 cents after adjusting for any share consolidation.

As part of the reverse takeover, Europtronics will also sell its entire business to chief executive officer and executive director Huang Chien Hung for $13 million in cash. Net inter-company debts will be set off.

After acquiring Gold Impact and selling its own business, Europtronics's "principal business will be in gold mining and exploration", the company said in a statement.