Steel supplier Asia Enterprises Holding is paying $8.86 million to buy a 28.64% stake in privately-held GKE Metal Logistics, so as to build additional earnings sources via a complementary business activity.
As at June 30 2024, the book value of the 28.64% stake in GKE Metal Logistics, which provides logistics and inventory management services of non-ferrous metals, was around $4.5 million.
To fund the acquisition, Asia Enterprises will issue 28.4 million new shares to the vendor, Li Jing, at 31.2 cents each.
At 31.2 cents, it is a premium of some 240% to the volume-weighted average price of 13 cents for each Asia Enterprises share on Dec 30, the last full market day prior to the execution of the sale and purchase agreement.
Upon completion of the deal, Li will hold a stake of 7.69% in Asia Enterprises, which has its operating history dating back to 1973.
Yvonne Lee Yih Chyi, managing director of Asia Enterprises, controls the company with a total interest of just below 40%.
See also: Nippon Steel, US Steel file lawsuits after Biden blocks deal
According to Asia Enterprises in its announcement on Jan 5, GKE Metal Logistics, incorporated back in 1984, is a London Metal Exchange-listed warehouse operator in Singapore.
In addition, its subsidiary in China is an approved warehouse operator for the Shanghai Futures Exchange and the Shanghai International Energy Exchange.
On Aug 6 2024, Asia Enterprises reported lower earnings for its 1HFY2024 ended June 30 2024, no thanks to lower business volume.
The company maintains that its balance sheet remains "sound" as it is debt-free and holds cash and equivalents of 13 cents per share as at June 30 2024, equal to its last traded share price. Taking into account inventory and other assets, Asia Enterprises' net asset value was 28.6 cents.
