SINGAPORE (THE BUSINESS TIMES) - Mainboard-listed trading company Intraco has agreed to acquire a 51 per cent stake worth about $47.2 million in digital asset platform MHC Singapore, the company said in a bourse filing on Monday (Feb 7).
This comes after the companies entered into a binding heads of agreement (HOA) on Dec 13, 2021, which was revised in a second binding HOA on Dec 22, 2021.
MHC Singapore, to be incorporated in Singapore by Australian entrepreneurs Mark Carnegie and Sergei Sergienko with equal shareholdings, will take over the relevant businesses and assets of Australian digital asset platform MHC Digital Group.
The deal is subject to shareholder approval, which will be sought, among other things, in an upcoming extraordinary general meeting.
The proposed transaction is also conditional upon the fulfilment of certain conditions - including MHC Singapore achieving a 12-month consolidated group net profit after tax of at least $18.5 million within 24 months of the acquisition agreement dated Feb 7. This is down from the $20 million target in the second HOA, which had already been reduced from $24 million in the first HOA.
Other changes in the new agreement include reducing the issuance of warrants in payment to 52.5 million from 58 million, with each carrying the right to subscribe for 1 new share in the company. The issuance of 42 million new shares in payment at an issue price of 50 cents remains unchanged. Both comprise the total consideration of around $47.2 million.
The warrants will not be listed or traded on the Singapore Exchange and will be exercisable by each seller at any time within five years, down from seven years, from the date of issue. This is unless Mr Carnegie and Mr Sergienko each own more than 14.5 per cent of the company.
There is no meaningful historical book value, net tangible asset value or net profit attributable to the shares or assets as MHC Singapore will be a new company to be incorporated and the scope of the assets is not finalised, the statement noted.
Mr Carnegie and Mr Sergienko also must not request a board seat in Intraco if they each hold shares and/or securities convertible into 15 per cent or more of the total issued share capital.
Separately, Intraco has agreed to issue 40 million warrants at an exercise price of 50 cents to Mr Wong Fong Fui, chairman and group chief executive officer of Boustead Singapore. He previously introduced MHC Digital Group and the deal to Intraco.
Mr Mak Lye Mun, chairman and independent director of Intraco, is also an independent director of Boustead.
The warrants can be exercisable at any time within four years from the date of issue, unless Mr Wong owns more than 14.5 per cent of the company or unless the outstanding share capital of Intraco exceeds 283 million shares.
The group intends to expand its fund management offerings and incorporate new trading strategies in the development of traditional over-the-counter execution and market-making services.
It also plans to provide corporate finance advisory services focused on leveraging an expanded balance sheet to provide a gateway to institutional investors to deploy capital into traditional financial products with exposure to the metaverse and digital asset ecosystem.
Shares of Intraco ended flat at 46 cents on Monday, after its trading halt was lifted following the announcement.
