It'll sell its current business producing semiconductor equipment to ASTI Holdings

 

By CHEW XIANG

 

CATALIST-listed Advanced Systems Automation (ASA) yesterday said it will be buying a Chinese fabric maker and selling its present business producing semiconductor equipment to controlling shareholders ASTI Holdings.

 

Thinkgreat Investments, a textile business which will now be listed through the reverse takeover, will cost $5 million in cash and $260 million in 928.6 million new shares at 28 cents apiece, ASA said.

The deal will also see ASTI - which now owns 39 per cent of the company - capitalising some $19 million in outstanding loans owed to it by ASA into new shares. Another $8.6 million in outstanding loans will be set off as consideration for businesses that ASTI is buying.

ASA will also raise further capital by undertaking a two-for-five rights issue, with a detachable warrants issue, and also issue $25 million in one per cent notes to an investment fund.

The one cent per share rights issue could raise $19.4 million with the detachable warrants, issued at two-for-five rights issue shares, raising another $3.9 million if fully exercised.

After the rights and warrants issue, divestment and notes placement, the shares will undergo a 15-to-1 consolidation before the issue of new shares to acquire Thinkgreat.

ASA said the reverse takeover was in the best interests of the company as the outlook for its business 'is increasingly challenging in the current economic climate'.

The company could find it difficult to get finance to operate efficiently and to sustain the business, ASA said. 'The directors are of the view that the proposed acquisition offers an opportunity to acquire a profitable business in the textile industry which would likely enhance shareholder value.'

Thinkgreat's most recent unaudited results show a net profit of 121 million yuan (S$24.7 million) for the year ended Dec 31, 2008, on sales of 612.3 million yuan. The present Chinese vendors will own more than half the post-acquisition company following the deal.

The deal is dependent on satisfactory due diligence, and regulatory and shareholder approvals for the entire package.

For the third quarter to Sept 30, ASA lost $1.5 million on sales of $3.2 million. Over the nine-month period, losses came to $5.3 million on sales of $9.7 million, about half the $19.8 million in sales achieved for the same period the previous year.

Trading in the stock has been halted since Wednesday and will resume Monday morning.