Advanced Systems proposes to buy video game company for $120m in RTO

SINGAPORE (THE BUSINESS TIMES) - Advanced Systems Automation has agreed to fully acquire a video gaming company, Excelgames Interactive Asia Holdings, for a base consideration of $120 million in a transaction that will constitute a reverse takeover upon completion.

This comes after Advanced Systems' Feb 27 announcement that it would dispose of certain subsidiaries, after which it will cease to hold any operating businesses and become a cash company.

In a bourse filing on Wednesday (June 9) evening, Advanced Systems said its decision to dispose of these subsidiaries was due to "significant disruptions" to the group's business operations caused by Covid-19, which resulted in net losses, limited cash flow, as well as limited opportunities to undertake fund-raising exercises.

The group added that its proposed acquisition is in line with its plan to enhance its profitability, through the acquisition of a business with "good growth potential in the thriving gaming industry".

Its board views Excelgames as a profitable company that is "helmed by an experienced management team that has in-depth experience in the gaming industry".

Out of the $120 million base consideration, $114 million will be satisfied by the allotment and issuance of new shares in the capital of Advanced Systems, at a minimum implied issue price of 16.33 cents per share.

Another $6 million of the consideration will be satisfied by way of cash to the vendors of Excelgames.

Following the completion of the acquisition, Excelgames' vendors - Samuel Ong, Roland Ong and Alan Leung - will carry out a restructuring exercise in Advanced Systems and will hold 100 per cent of Excelgames thereafter. All three of the company's vendors have been noted by Advanced Systems for their years of experience in the online gaming industry, including in e-sports.

With operations in Singapore and Hong Kong, Excelgames is involved in the physical and online sale, marketing and distribution of video games and video game-related hardware and software. It also operates an e-sports arena.

The company booked a FY2020 unaudited revenue of $116.7 million and net profit after tax of  $2.3 million for the financial year ended March 31 last year.

Assuming that the acquisition and restructuring exercise had been completed as at March 31 last year, Advanced Systems' net asset value and net tangible assets would have both been $12.9 million.

Shares of Advanced Systems ended Thursday flat at 0.1 cent.