SINGAPORE - Mainboard-listed ASTI Holdings said it has on March 30 entered into a sale and purchase agreement with Shanghai Pudong Science and Technology Investment (PDSTI), to sell its core semiconductor technologies and instruments businesses, collectively known as the STI Group, for S$90 million in cash, plus an additional S$38 million in dividends.
This consideration is subject to adjustments for changes to the disposed businesses' balance sheet and expected profitability.
Of the S$90 million, 80 per cent or S$72 million, shall be payable by PDSTI once the transaction has been completed.
Another S$9 million is conditional upon the actual net asset value of STI Group being equal or higher than S$69 million; while the remaining S$9 million is subject to a profit guarantee, with STI Group making profits (before taxes) of no less than S$17 million in 2018 and 2019.
In a press statement on Monday (April 2), the company said the deal realises the value that ASTI has built in STI over the years, which is substantially higher than ASTI's book value of S$50.6 million as at Dec 31, 2017, and a market cap of S$47.8 million as at March 29, 2018.
Shares in ASTI last traded 10.6 per cent, or 0.7 Singapore cent higher to 7.3 Singapore cents apiece on March 29.
Earnings per share is expected to increase to 6.65 Singapore cents after the proposed disposal, compared to a loss per share of 0.67 Singapore cent before the disposal.
Net tangible asset per share is also expected to increase to 14.44 Singapore cents from 7.09 Singapore cents.
The board is of the view that the proposed disposal will allow the firm to unlock the value of the assets in the STI Group and re-strategise its resources.
With the proposed disposal, ASTI will substantially reduce its liabilities, improve its gearing and have more working capital to fund its operations and undertake new investment opportunities, the company said.
Estimated net proceeds from the proposed disposal after deducting expenses is about S$72.8 million. ASTI intends to utilise the net proceeds for general working capital requirements, and to fund future business expansions, investments and acquisitions when suitable opportunities arise, it said.
This deal includes the disposal of the entire issued and paid-up share capital of its subsidiaries including: Semiconductor Technologies & Instruments (STI SG); Semiconductor Technologies & Instruments Sdn Bhd (STI Msia); Semiconductor Technologies & Instruments Phils (STI Phils); Semiconductor Technologies & Instruments (Taiwan) (STI TW); and STI Tech Korea (STI Korea).
Prior to the disposal, ownership of STI Msia, STI Phils, STI TW and STI Korea will be transferred from ASTI to STI SG in a restructuring process. Upon completion of this restructuring, STI SG, STI Msia, STI Phils, STI TW and STI Korea will be known as the STI Group.
The proposed disposal constitutes a "major transaction" under the Singapore Exchange's (SGX) listing rules, and is subject to the approval of the shareholders of the company being obtained at an extraordinary general meeting to be convened.
The STI Group is principally engaged in the business of research, design, development, manufacturing and marketing of semiconductor equipment.
PDSTI is a Shanghai-based investment company specialising in domestic and oversea investments in the high-tech industries.