SINGAPORE - Catalist-listed Edition has entered into a binding memorandum of understanding (MOU) to acquire 51 per cent of cybersecurity firm Hyperlync Technologies' enlarged share capital by extending a two-year credit facility of up to US$3.5 million (S$4.7 million).
Edition, which offers software and content for cellular telephones, also plans to extend a S$1 million six-month, 8 per cent bridging loan to Hyperlync. This amount will be considered a drawdown on the eventual US$3.5 million facility, which will also bear interest at 8 per cent.
Hyperlync's CEO and founder Harry Fox will also have a call option to require Edition to sell him new Edition shares representing up to 20 per cent of Edition's enlarged share capital if the aggregate pre-tax profit of Hyperlync hits certain targets in fiscal 2019 and 2020. The option will be for a 10 per cent stake if the total profit in those years is US$11.53 million; 15 per cent if the total profit is US$17.3 million and above; and 20 per cent if the total profit is US$23.06 million and above. Mr Fox currently owns 11 per cent of Hyperlync's issued share capital.
This facility may, at the option of the company, be limited to a maximum amount of US$3 million if Hyperlync does not hit certain performance targets.
As security for the bridging loan, Edition will have the right to convert the loan into 30 per cent of Hyperlync's total issued share capital if Hyperlync defaults. The bridging loan agreement will also grant Mr Fox a call option to buy back the conversion shares for S$2 million if exercised within 12 months after conversion.
Edition said that the acquisition is part of its business strategy to to continue investing in the technology sector.
The bridging loan and the credit facility shall be paid in cash, and will be funded via internal resources, Edition said.
The counter last traded at 0.5 Singapore cent apiece on Monday (June 5), down 16.7 per cent.