Monday, July 25, 2011

Kyodo-Allied Industries

Kyodo-Allied Industries: receives sh/h approval to acq Chinese property developer Weiye Group for $600m in a reverse takeover deal (RTO). Weiye has an est mkt cap of $716m. Its shares are scheduled to begin trading on Aug 16.
The proposed acquisition, announced Mar 10, will see Kyodo-Allied issue 1.64b new consolidated shares at $0.365 apiece to the owners of Great Spirit Mgt, the holdco of Weiye. To comply with SGX's requirement for a min issue price of $0.20, Kyodo-Allied will consolidate every 3.5 existing shares into 1 consolidated share.
Under the deal, Weiye will emerge with 83.8% of the enlarged share capital. Kyodo-Allied will be renamed Weiye Holdings, and a change of board of directors will also take place.

Post-RTO, mgt says the group will have ~$40m which will be used to meet expansion needs and plans. The Kyodo-Allied's existing business will not be disposed of, and will continue to be operated and maintained by its existing mgt team.
Weiye is based mainly in the Chinese provinces of Henan and Hainan. The co, which has posted a profit for the last 3 FYs, made a net profit of Rmb75.9m (S$14.2m) last year. Mgt says Weiye has more than 1.2m sm of gfa in its devt pipeline, and is confident of the group's prospects as the property cooling measures in China are targeted at large cities and not the Tier-3 and Tier-4 cities where Weiye is active.

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