After cutting loose from the Apple reseller business, Catalist-listed EpiCentre Holdings is repositioning itself as a property development and hotel company.
The company said yesterday it would get into these businesses through a reverse takeover.
The company is also terminating a rights-cum-warrants issue. Instead, it will raise funds via a share placement.
The share placement is meant to snag strategic investors to support the new businesses, said acting chief executive Kenneth Lim.
The reverse takeover would involve buying all of investment holding company MacroCap Asia Capital, owner of Thai property developer Asia ThaiYuan, and Chinese hotel manager Gloria International, for $400 million altogether.
Loss-making EpiCentre will pay for the deal by issuing new shares to the vendors - whom it said are independent third parties - at $0.23 apiece, for an 85 per cent stake in all, after a separate share placement exercise.
That sum values MacroCap, which owns an unfinished mixed-use development in Bangkok, at $375 million, and the Gloria group, which manages 52 hotels in China, at $25 million.
But the price tag - reached on a willing buyer, willing seller basis on arm's-length negotiations - is subject to changes depending on what the valuation reports say, it added.
EpiCentre also said yesterday it will issue up to 79.74 million new shares at $0.12 each, to raise some $9.32 million in net proceeds.
The move "is more or less related to the upcoming reverse takeover", said Mr Lim. "We're targeting more strategic investors who may bring more value for the company, given the business diversification."
The new placement exercise, which is being done under a general shareholder mandate at the annual general meeting, replaces an earlier rights issue for existing shares that would have netted $15.79 million.
Between 60 per cent and 70 per cent of the share placement proceeds will repay liabilities, EpiCentre said, while the rest will be used for general working capital, as well as future acquisitions and related expenses.
Also going towards paying off suppliers is the $516,275 consideration from the planned sale of EpiCentre's Apple reselling operations in Singapore.
The company has entered into a sale and purchase agreement with rival reseller brand iStudio's owner, Elush (T3) Pte Ltd, but said it will incur a deficit of about $950,000 on the deal proceeds.
According to EpiCentre's latest statements for the half-year to Dec 31, 2017, current liabilities stood at $16.57 million, with about two-fifths being trade and other payables.
The financial statements said that Apple and third-party product sales made up 93 per cent of EpiCentre's $4.96 million in gross profits. But Tuesday's disposal announcement stated that the Singapore-based Apple resale business and assets accounted for 2.37 per cent of the loss before income tax of $2.25 million.
Mr Lim, the acting CEO, also reiterated that EpiCentre is in a positive working capital position. He stood by last October's board announcement that the group had sufficient working capital for 12 months.
Meanwhile, under the reverse takeover pact inked yesterday, EpiCentre will have to quit the beauty and wellness business too.
It paid $3.06 million for a 51 per cent stake in hair and skin company Japan IPL Holdings last year, and said only on Tuesday that it would focus on this segment, "while looking at other possible related businesses", after it sells off the local resale arm.