The consideration will be paid via the transfer of 100 million treasury shares from Yangzijiang to Sanfu.
The consideration was arrived at after negotiations, and on a “willing buyer willing seller” basis, which took into account, among other factors, Jiangsu Yangzi’s net tangible assets (NTA) value as at June 30 and its business prospects.
The Xinfu Yard’s NTA as at June 30 is RMB3.85 billion.
See: UOB Kay Hian sees Sembcorp, Yangzijiang and Keppel as 'compelling investment cases' in offshore & marine sector
The transfer price for each consideration share of RMB6.5 or $1.37, represents a 0.63% premium to the volume-weighted average price (VWAP) of $1.3614 of shares traded on the SGX-ST on July 21.
The consideration shares will rank the same as the existing issued ordinary shares of Yangzijiang. They will, however, not rank for any dividends, rights, allotments, distributions or entitlements should they be transferred on or before the record date.
Following the transfer of the shares, Yangzijiang’s share capital will increase from 3.85 billion to 3.95 billion units. The shares will represent around 2.53% of the enlarged number of issued and paid-up shares in Yangzijiang.
The Xinfu Yard currently has an issued and paid-up share capital of US$90 million ($123.0 million).
Yangzijiang, together with its wholly-owned subsidiary, Jiangsu New Yangzi Shipbuilding own 12.5% and 67.5% in the Xinfu Yard respectively.
The transaction is expected to be accretive to the earnings of Yangzijiang and it is part of the group’s efforts to enhance long-term shareholder value.
“Since its incorporation in 2007, the Xinfu Yard has grown from strength to strength and established a strong track record in shipbuilding. The further acquisition signifies a huge investment in one of Yangzijiang’s key business units and in our existing major shipyard. The acquisition is also expected to be earnings accretive for the group and is part of our continuous efforts to enhance long-term growth prospects and shareholder value,” says Ren Letian, executive chairman and CEO of Yangzijiang.
“This transaction is fulfilled by the transfer of the group’s treasury shares which is reflective of Sanfu Shipbuilding Holdings’ confidence in the inherent value of the Group. On this note, I will also like to express appreciation towards the good working relationship that we have with Sanfu Shipbuilding Holdings over the years.”
Shares in Yangzijiang closed flat at $1.36 on July 21.
