Investor Relations - News
Acquisition Of RM Diesel Pte Ltd ("RMD")
The Board of Directors of Metalock (Singapore) Limited ("Metalock") is pleased to announce that, Dynamic Turbocharger Services (Australia) Pty Ltd ("Dynamic"), a wholly-owned subsidiary of Metalock, has entered into a conditional agreement ("Agreement") with R.M. Diesel Pty Ltd ("RMD" or "Vendor") today for the purchase of its business as an on-going concern together with its business assets (the "Assets").
RMD supplies quality diesel fuel injection spare parts (the "Business") in Australia. Through its offices in Sydney and Brisbane, it has developed an extensive stock holding, incorporating all major brands like, Bosch, Denso, Delphi, etc.
Under the Agreement, Dynamic will purchase the business assets of RMD for a cash consideration of A$2,816,043. Dynamic will also offer employment to all employees of RMD upon completion.
The cash consideration was arrived at on a "willing buyer and willing seller" basis and is based on the net book value of the Assets as at 31 March 2002 of A$1,363,707, which comprises plant and equipment, stocks-in-trade, motor vehicles, intellectual property, business names, brand names, business records, property leases (but excluding cash in hand or in banks and debts accrued to RMD as at completion date); plus a premium of A$ 1,452,336 for goodwill and the rights and benefits of RMD under the business contracts.
In the negotiations, the parties took into consideration that owners of RMD will not undertake or be involved in any business in Australia which is directly or indirectly competitive with the Business for a period of three years.
The final consideration payable is subject to adjustments to take into account the results of a review of the stocks to be carried out within 10 business days of the completion date, the net book value of the Assets as at completion as well as provisions for employee leave entitlements. The parties expect to finalise the aforesaid results of the stock review and net book value of the Assets and determine the purchase price of such stocks and Assets within 13 business days after the completion date ("Finalisation"). The acquisition will be funded through a combination of internal resources and external borrowings.
Completion of the purchase of the Assets is subject to the following conditions precedent being obtained or waived by the completion date:
1. the supply to Dynamic of the benefit of the main distribution and agency agreements upon terms and conditions acceptable to Dynamic;
2. completion of Dynamic's due diligence investigations in respect of the Business to the satisfaction of Dynamic.
Completion will take place on 1 August 2002 or such other date as the parties may agree. Upon completion, Dynamic will pay the cash consideration of A$2,816,043 to the Vendor. The adjustments will be paid by Dynamic within 5 business days after the Finalisation.
The Directors believe that RMD's activities are complementary to Dynamic's current operations in the sales and servicing of turbochargers. It is the intention to integrate the fuel injection activities into Dynamic's existing nationwide network in Australia. As both operations shared a common set of customer base, Dynamic will be able to provide customers with a "one-stop" service center with the acquisition and improve the level of service to our customers.
The fuel injection activities of RMD generated a profit before tax of approximately A$467,000 for the financial year ended 30 June 2002.
Should the transaction take place on 1 April 2001, the Company's consolidated earnings per share for the year ended 31 March 2002 would have increased from 1.87 cents to 2.12 cents. The transaction is not expected to have any material impact on the Company's consolidated net tangible assets per share.
None of the directors or substantial shareholders of Metalock has any interest, directly or indirectly, in the acquisition.