Axington has inked a non-binding memorandum of understanding to acquire a 60 per cent stake in a Hong Kong Web technology company, a move that is expected to result in a reverse takeover of the Catalist-listed cash company.

In its regulatory statement to the Singapore Exchange on Thursday, Axington announced that the understanding, inked on the same day, would form the broad basis of the definitive agreements to be entered into within a month with Delta Investment Holding Group for the proposed acquisition of the stake in Veivo Web Technology for $405 million.

The acquisition will see Axington pay at least $30 million in cash as well as issue and allot new shares at no less than 19 cents per share to the vendor.

Veivo Web Technology is established in Hong Kong with a paid-up capital of HK$100 (S$17.40). The company's wholly foreign-owned unit established in China is attempting to obtain full control over Beijing Ruihua Veivo Internet Technology by entering into control agreement(s) with the latter company's shareholders.

Beijing Ruihua Veivo Internet Technology is mainly engaged in operating an instant messaging platform, paid application store and cloud application platform in China, and also has a telecommunications and information services business operating licence.

Axington said it will see that Dorr Global Healthcare International, its controlling shareholder with a 77.88 per cent stake, give written undertakings to vote in favour of the proposed move.

The deal is subject to a string of conditions, including the resumption of trading and the completion of the ongoing announced rights issue undertaken by the company.

In a separate filing on Thursday, Axington said its board has been made aware of the bankruptcy order against Mr Terence Loh, its controlling shareholder through his holding in Dorr Global Healthcare. It said it will monitor the situation and make announcements as and when there are developments that merit disclosure.

In that same filing, Axington also listed queries by the Singapore Exchange on the disclaimer of opinion by the company's independent auditor on its financial statements for the financial year ended Dec 31 last year.

Trading in the stock was voluntarily suspended at the end of August last year, following developments in the media over its controlling shareholders.

THE BUSINESS TIMES