1. INTRODUCTION
The Board of Directors of Oakwell Engineering Limited (the “Company”, and collectively, with its subsidiaries, are referred to as the “Group”) wishes to announce that following the execution of the Letter of Intent on 23 May 2013, it has entered into a conditional sale and purchase agreement (“CSPA”) with Sonepar Asia Pacific Limited (“Sonepar”) and Elec Holdings Limited (“Elec”) (collectively referred to as the “Purchasers”) on 20 August 2013 for the sale of 100% of the total paid-up and issued share capital (the “Sale Shares”) of Oakwell Distribution (S) Pte Ltd (“ODS”) for a base consideration of S$70,000,000 (the “Base Consideration”) with an adjustment amount (“Adjustment Amount”) (collectively, referred to as the “Consideration”) in accordance with the terms and conditions of the CSPA (the “Proposed Disposal”).
Comments : Just to share with you above quote on the proposed sale of a subsidiary by Oakwell.
Oakwell is currently capitalised at $54.1 mil based on share price of 8.1 cts and 668.3 mil shares. The proposed sale of subsidiary is agreed at $70 mil which is 29% above it's current capitalisation.For details, pls refer to their annoucement today (21 august 2013).
It seems that the management is committed to distribute dividend from the sale of the subsidiary. I believe the dividend will be quite meaningful as happened in other companies when they decide to sell off parts of their business. In this case the sum involved is very substantial ... $70 million which is higher by close to 30% than the company capitalisation of $54.1 millions.(The $54.1 millions is based on share price of 8.1cts) See quote below on how they intend to use the proceeds from the sale :
Quote :
7. INTENDED USE OF THE PROPOSED DISPOSAL PROCEEDS
It is the intention of the Directors to deploy the proceeds from the Proposed Disposal to fund future acquisitions and its working capital, consider reducing its bank borrowing and provide a dividend distribution.
The Company will make the necessary announcements as and when such funds are materially disbursed and subsequently provide a status report on the use of such proceeds and any material deviations therefrom in its annual report.
Pending the deployment of the net proceeds from the Proposed Disposal, the net proceeds may be deposited with banks and/or financial institutions, invested in short-term money market instruments and/or marketable securities, or used for any other purpose on a short-term basis, as the Directors may, in their absolute discretion, deem fit.
Below quote from their announcement on 21st aug 2013 fyi
5. COMPLETION DATE
(a) The completion of the Proposed Disposal (“Completion”) shall take place on 31 October 2013 (“Completion Date”) or any other date as may be mutually agreed in writing between the parties to the CSPA.
(b) The Purchasers will not be obliged to complete the purchase of the Sale Shares under the CSPA unless the Company complies fully with its obligations under CSPA and unless the purchase of all of the Sale Shares is completed simultaneously.
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