IPower
Dated Sept 2011 …
I-Power Bhd
will rope in new shareholders under a reverse takeover aimed at rejuvenating
the loss-making information technology solutions provider via the injection of
a new business in the firm.
IPower is a
turnkey project design and engineering solutions provider for
telecommunications network.
It plans to
acquire the entire stake in Instacom Engineering Sdn Bhd, a telecommunications
engineering and services provider for RM102 million. The purchase will be
financed via the issuance of 1.02 billion new shares in I-Power, priced at 10
sen each, to the owners of Instacom.
The proposed
acquisition will allow I-Power to diversify its business in the
telecommunications industry. Barring unforeseen circumstances, the proposed
acquisition is expected to contribute positively to I-Power in the future.
The company
which posted a net loss of RM31,000 in the nine months ended March 2011.
I-Power had signed a conditional share sale agreement with the owners of Instacom Engineering — Chan Chuck Yan, Anne Kung Soo Ching, Ngu Sing Hieng and Wong Say Khim (collectively the vendors) for the proposed acquisition.
Upon completion of the acquisition, the vendors will emerge as the controlling shareholders of I-Power, with some 71% of the company’s expanded issued share base of 1.23 billion shares. This compares with the existing capital base of 438.2 million shares.
I-Power’s name will be changed to Instacom Holdings Bhd in which Kung and Ngu will be appointed as directors. The vendors do not intend to make a general offer for the remaining shares of the company.
The RM102 million consideration for the entire stake in Instacom Engineering values the firm at a forward price-earnings ratio of 6.8 times its forecast profit after tax (PAT) of RM15 million in the financial year ending Dec 31, 2012, with a profit guarantee.
It is worth noting that Instacom reported lower net profit of RM2.02 million in 2008, RM710,000 in 2009 and RM3.47 million in 2010. For 1HFY11, it posted a net profit of RM4.2 million on revenue of RM39.04 million.
As at June 30, 2010, Instacom had shareholder funds of RM15.08 million and borrowings of RM115.21 million, although its cash position was not disclosed. This suggests an acquisition price-to-book ratio of 6.8 times, although it is also being issued new I-Power shares priced above current trading prices.
In conjunction with the acquisition, I-Power also plans to undertake a share capital reduction via the cancellation of nine sen of the par value of every 10 sen share in the company. Subsequently, it intends to consolidate 10 units of the one-sen shares into one share of 10 sen each.
The vendors will also offer for sale up to 153 million consideration shares or 14.3% of the company’s expanded issued base to investors to be identified later at 10 sen each.
This will be followed by a private placement of up to 160.13 million shares or 15% of I-Power’s share capital to third party investors at 10 sen each. The share placement is expected to raise proceeds of RM16.01 million which will finance the working capital needs of I-Power.
I-Power had signed a conditional share sale agreement with the owners of Instacom Engineering — Chan Chuck Yan, Anne Kung Soo Ching, Ngu Sing Hieng and Wong Say Khim (collectively the vendors) for the proposed acquisition.
Upon completion of the acquisition, the vendors will emerge as the controlling shareholders of I-Power, with some 71% of the company’s expanded issued share base of 1.23 billion shares. This compares with the existing capital base of 438.2 million shares.
I-Power’s name will be changed to Instacom Holdings Bhd in which Kung and Ngu will be appointed as directors. The vendors do not intend to make a general offer for the remaining shares of the company.
The RM102 million consideration for the entire stake in Instacom Engineering values the firm at a forward price-earnings ratio of 6.8 times its forecast profit after tax (PAT) of RM15 million in the financial year ending Dec 31, 2012, with a profit guarantee.
It is worth noting that Instacom reported lower net profit of RM2.02 million in 2008, RM710,000 in 2009 and RM3.47 million in 2010. For 1HFY11, it posted a net profit of RM4.2 million on revenue of RM39.04 million.
As at June 30, 2010, Instacom had shareholder funds of RM15.08 million and borrowings of RM115.21 million, although its cash position was not disclosed. This suggests an acquisition price-to-book ratio of 6.8 times, although it is also being issued new I-Power shares priced above current trading prices.
In conjunction with the acquisition, I-Power also plans to undertake a share capital reduction via the cancellation of nine sen of the par value of every 10 sen share in the company. Subsequently, it intends to consolidate 10 units of the one-sen shares into one share of 10 sen each.
The vendors will also offer for sale up to 153 million consideration shares or 14.3% of the company’s expanded issued base to investors to be identified later at 10 sen each.
This will be followed by a private placement of up to 160.13 million shares or 15% of I-Power’s share capital to third party investors at 10 sen each. The share placement is expected to raise proceeds of RM16.01 million which will finance the working capital needs of I-Power.
These
proposals are due for completion by June 2012.
The vendors
had a profit guarantee of RM15 million for FY12 ending Dec 31, the combined
profit after tax of the expanded company would come to RM14.97 million.
The proposed
capital reduction is essential to erase IPower’s accumulated loss of rm65
million, whether Instacom will be serve as a lifeline for IPOwer’s shareholders
remain to be seen.
Incorporated
in 2001, Sarawak based Instacom is among the three companies chosen for Maxis’s
Smart Partners Programme, putting is in the same league as R&A
Telecommunication. Besides Maxis, Instacom’s client include Digi, Celcom, Hua
Wei, Sony Ericsson, Nokia and Seimens.
No comments:
Post a Comment