Core business divested for cash
Total Automation announced that the company has entered into a conditional sale and purchase agreement with Wartsila Corp (Wartsila) to dispose of its entire business that is mainly in the control, engineering and manufacturing business for a cash consideration of approximately SGD120m. The company is expected to reap net proceeds of about SGD116.5m. This works out to cash of approximately SGD0.72 per share. Following the completion of the proposed disposal, the group would not have any business and its assets would mainly be in cash. Under Rule 1018 of the SGX Listing Manual, if the assets of a listed company consist wholly or substantially of cash or short-dated securities, the securities of the listed company will normally be suspended by the SGXST.
Taking this into account, it is the intention of the board to look for new assets/ businesses to be acquired through cash or otherwise, and to maintain value for TAL shareholders.
Proposed Capital Reduction via Cash Distribution
The board has proposed a cash distribution of S$90 million back to shareholder. That works out to be $0.53 -$0.55 per share.
Future Development for Total Auto
In order to maintain the listing requirement, the board will continue to seek new business or asset acquisition. With a cash consideration of $26.5 million, I believe this amount is adequate to acquire a reasonable business or asset.
As such, on a personal tone, I will call for a buy as the shares is trading at a 16% discount to its cash asset.
Total Automation announced that the company has entered into a conditional sale and purchase agreement with Wartsila Corp (Wartsila) to dispose of its entire business that is mainly in the control, engineering and manufacturing business for a cash consideration of approximately SGD120m. The company is expected to reap net proceeds of about SGD116.5m. This works out to cash of approximately SGD0.72 per share. Following the completion of the proposed disposal, the group would not have any business and its assets would mainly be in cash. Under Rule 1018 of the SGX Listing Manual, if the assets of a listed company consist wholly or substantially of cash or short-dated securities, the securities of the listed company will normally be suspended by the SGXST.
Taking this into account, it is the intention of the board to look for new assets/ businesses to be acquired through cash or otherwise, and to maintain value for TAL shareholders.
Proposed Capital Reduction via Cash Distribution
The board has proposed a cash distribution of S$90 million back to shareholder. That works out to be $0.53 -$0.55 per share.
Future Development for Total Auto
In order to maintain the listing requirement, the board will continue to seek new business or asset acquisition. With a cash consideration of $26.5 million, I believe this amount is adequate to acquire a reasonable business or asset.
As such, on a personal tone, I will call for a buy as the shares is trading at a 16% discount to its cash asset.
Comments