Halcyon

Halcyon: Another vote of confidence from Koh Boon Hwee's Credence Capital, as the fund takes up one-third of the 40m share placement at $0.72 each. This will boost its stake from 12.12% stake to 13.26% of the enlarged share capital. The placement also includes value-centric private equity fund Providence Capital Management and the investment arm of Kong Siang Group. The proceeds of $28.8m from Halcyon's second placement in six months will fund part of its purchase of upstream rubber group, JFL Agro, in Malaysia for an aggregate consideration of $56.1m. The remaining will be paid from the group's internal cash or bank borrowings ($8.6m) and an issue of 26m shares @ $0.72 apiece ($18.7m) to the vendors. JFL Agro holds the lease for 17,652.8 acres of cultivable land in Kelantan, $78.4k worth of palm tree seedlings, 741.3 acres of planted palm trees and $0.7m worth of fixed assets. FYMar13 financials for JFL Agro recorded a loss before tax of $548k from operating costs amid no revenue, and a NAV of $1.6m. Subjected to approval and terms of the agreement, the acquisition is expected to complete before 31 Dec 2013. The acquisition is in line with Halcyon's strategic advancement towards long-term sustainability and will be complementary to its recent proposed acquisition of Chip Lam Seng (CLS), a mid-stream rubber player. Once the rubber plantation of JFL Agro is fully matured, it will provide up to 10% of the raw material feedstock for the CLS factories, which may potentially translate to higher margins for the group.