Investor Relations - News
Sale And Purchase Agreements
The Directors of Metalock (Singapore) Limited ("Metalock") hereby announce that on 15 February 2002:-
1. MTQ Engineering Pte Ltd ("MTQ"), a wholly owned subsidiary of Metalock, has entered into a conditional agreement ("MTQ Agreement") with Ciserv Singapore Pte Ltd ("Purchaser") for the sale by MTQ of its assets relating to its marine repair services and the trading and selling of related marine spare parts and components businesses ("Assets") (but excluding accounts payable and receivable) to the Purchaser for a consideration of S$5.6 million; and
2. Metalock has entered into a conditional agreement ("Metalock Agreement") with the Purchaser for the sale by Metalock of 27 Gul Drive, Singapore 629475 ("Property") to the Purchaser for a total consideration of S$3 million.
W?rtsil? Singapore Pte Ltd, the immediate parent company of the Purchaser, has agreed to guarantee the Purchaser's performance of its obligations under the MTQ Agreement and the Metalock Agreement. Metalock has also agreed to guarantee MTQ's performance of its obligations under the MTQ Agreement.
MTQ is a company incorporated in Singapore and is in the business of providing repair services to the marine, oilfield and other land-based related industries as well as supplying and trading in marine and industrial products.
The Purchaser is part of an international group which is the leading global ship power supplier and a major provider of solutions for decentralised power generation and of supporting services. The ultimate parent company of the Purchaser, W?rtsil? Corporation, is a company listed on the Helsinki Stock Exchange in Finland.
MTQ Agreement
Under the MTQ Agreement, MTQ will sell its Assets to the Purchaser for a cash consideration of S$5.6 million.
The total consideration for the sale of the Assets was agreed between the parties on a "willing-buyer and willing-seller" basis after negotiations. The final consideration payable is subject to adjustments, inter alia, to take into account, any difference in the net asset value of the Assets as at completion and the net asset value of the Assets as set out in the 31 August 2001 accounts.
The consideration is based on the book value of the Assets of S$3.1 million as at 31 August 2001 plus a goodwill of S$2.5 million. In the negotiations, the parties took into account, inter alia, the fact that, after completion, MTQ will stop its current marine repair services and the trading and selling of related marine spare parts and components business ("Business") for 5 years in competition with the Purchaser.
Completion of the sale of the Assets is subject to, inter alia, the following conditions precedent: -
(i) the approval of the shareholders of MTQ and Metalock being obtained (if required);
(ii) the conditions precedent set out in the Metalock Agreement being met in accordance with the terms thereof and the Metalock Agreement remaining in full force and effect and not being rescinded or terminated in any respect prior to completion of the sale of Assets;
(iii) the approval of such other governmental or regulatory bodies (if required) for the sale and purchase of the Assets being obtained; and
(iv) MTQ's representations on machinery and stocks in the MTQ Agreement being materially true and accurate on the date of completion of the sale and there being no variations (other than variations permitted under the MTQ Agreement) in the quantity of such machinery and stocks as at the date of completion from that shown in MTQ's August 2001 accounts.
If any of the above conditions precedent (i) , (ii) or (iii) is not fulfilled within 6 months from the date of the MTQ Agreement or such later date as the parties to the MTQ Agreement may agree, or after the fulfillment of the above conditions precedent (i) , (ii) or (iii), the above condition precedent (iv) is not fulfilled on the completion of the sale, the MTQ Agreement shall cease and, save as may be expressly provided otherwise in the MTQ Agreement, none of the parties shall have any claims against the other for costs, damages, compensation or otherwise.
The following are fundamental terms of the MTQ Agreement :-
(i) completion under the MTQ Agreement shall take place simultaneously with completion of the sale and purchase of the Property under the Metalock Agreement;
(ii) the Purchaser shall not be entitled to require MTQ to complete the sale and purchase of the Assets under the MTQ Agreement if the sale of the Property under the Metalock Agreement is not completed for any reason whatsoever; and
(iii) fulfilment of all of the above conditions precedent.
Metalock Agreement
Under the Metalock Agreement, Metalock will sell the Property to the Purchaser for a cash consideration of S$3 million, representing a premium of S$1.1m above its book value of S$1.9m as at 31 August 2001.
The Property comprises a building which sits on approximately 5,051.4 square metres of Jurong Town Corporation ("JTC") land.
In arriving at the consideration of S$3 million for the disposal of the Property, Metalock took into account the advice from property consultants, Colliers Jardine, that the value of the Property as at 19 September 2001 was in the region of S$3 million based on the foregoing and current market conditions. The Property has a gross floor area of approximately 2,545.67 square metres.
Completion of the sale of the Property is subject to, inter alia, the following conditions precedent: -
(i) the approval from JTC being obtained; and
(ii) the approval of the shareholders of Metalock being obtained (if required).
If any of the above conditions precedent is not fulfilled within 6 months from the date of the Metalock Agreement or such later date as the parties to the Metalock Agreement may agree, the Metalock Agreement shall cease and, save as may be expressly provided otherwise in the Metalock Agreement, none of the parties shall have any claims against the other for costs, damages, compensation or otherwise.
Completion of the sale and purchase of the Property shall take place on the same day as completion of the sale and purchase of the Assets. It is a fundamental term of the Metalock Agreement that neither the Purchaser nor Metalock shall be entitled to require the other to complete the sale and purchase of the Property under the Metalock Agreement if the sale of the Assets under the MTQ Agreement is not completed for any reason whatsoever.
Metalock will be issuing a circular to the shareholders to give further details of the proposed transactions under the MTQ Agreement and the Metalock Agreement.
The Board of Directors of Metalock is of the view that the sale of the Property and MTQ's sale of the Assets would be in the interest of Metalock.
Despite MTQ's relentless efforts to constantly streamline its operations and improve productivity to strengthen its competitive edge, it does not have the size nor technical resources to achieve any significant technological breakthrough in the basic repair processes which could considerably increase cost efficiencies and boost margins. The Purchaser, on the other hand, is part of a group of companies which is one of the world's largest engine manufacturers. With their marketing power, established customer base and the cross-selling of the services provided by the Business by its sister and parent companies, the Purchaser will be able to bring a new impetus to the Business.
The divestment also fulfils Metalock's strategy to reduce its existing reliance on the marine repair services business in Singapore. Metalock has made significant progress in developing new business opportunities in land-based industries by leveraging on its engineering competency, one of the areas which Metalock will continue to focus and prioritise.
The sale proceeds will be used to fund Metalock's existing investments and potential expansion plans that it is currently exploring.
The employees of the Business will be transferred to the Purchaser in accordance with the terms of the MTQ Agreement.
Based on the audited consolidated accounts for the year ended 31 March 2001 and assuming that the transaction has been completed on 1 April 2000, the impact of the disposals on the net tangible asset per share and earnings per share of Metalock will be as follows:
(i) net tangible asset per share from 33.58 cents to 37.02 cents; and
(ii) earnings per share (after extraordinary items) from 2.47 cents to 5.90 cents.
None of the Directors or the substantial shareholders of Metalock have any interest in the transactions other than via their interest in Metalock.