NeoCorp   

Proposed RTO

By CHEW XIANG

MAINBOARD-LISTED steel stockist HG Metal yesterday entered into a memorandum of understanding with steel products trader Novo Group, which recently completed a reverse takeover of defunct construction company Neocorp International.

Mr Wee: 'This MOU will add to HG Metal's already expanding list of international steel suppliers. The current demand for steel products remains strong due to increased construction and shipbuilding activities.'

Under the MOU, Novo will supply HG Metal with at least 156,000 tonnes of steel products per year, about 9 per cent of Novo's reported steel supply.

The MOU is not legally binding and is subject to a definitive agreement to be executed within three months, the companies said in a joint statement.

Wee Piew, chief executive officer of HG Metal, said: 'This MOU will add to HG Metal's already expanding list of international steel suppliers. The current demand for steel products remains strong due to increased construction and shipbuilding activities.'

The trading volume for semi-finished and finished steel products is expected to rise 20 per cent to 480 million tonnes this year, from 400 million tonnes in 2006, according to the International Iron and Steel Institute. Steel prices have soared, driven by rising demand, higher prices for iron ore and coking coal and falling stocks.

HG Metal reported a 130.5 per cent increase in net profit to $8.5 million for Q1 2008.

The company said a construction boom and rising steel prices helped boost margins.

Novo Group, incorporated in Hong Kong in 2005, counts HG Metal and Lee Metal, another locally listed steel company, as customers.

Novo's backdoor listing on the Singapore mainboard is being completed and trading is targeted to begin on April 2.

For the first five months of FY2008, it posted a net profit of US$5.7 million on sales of US$211.5 million.

Chairman Dicky Yu said in an interview last week that the company has in place agreements to secure 1.76 million tonnes of steel products a year.

 

Hi timewatch,

Novo, the steel products trading company should complete its backdoor listing on the main board of SGX this month after a RTO of NeoCorp. Novo is now running roadshows to place out 172.9m new shares to achieve a 28% public float, chairman Dicky Yu said.

The company wants to price its shares at $0.20-$0.24 or 12.9 to 15.4 times FY2007 earnings. Mr Yu expects net proceeds of $33-40m. Some US$12.8m will be used as cash pledges to secure new trading facilities.

The company, incorporated in Hong Kong in 2005, has grown rapidly. Turnover for the year ended Apr '07 came to US$310.9m, while net profit totalled US$7.3m. For the first 5 months of FY08, it posted a net profit of US$5.7m on sales of US$211.5m.

Novo is a middleman between steel producers and stockists and end-users. It provides services across the value chain, including trade financing, demand aggregation and logistics.

 

hello, right now its suspended right -when could that likely be lifted. Thanks

 

 

Neocorp yesterday said that the company has entered into a conditional sale and purchase agreement to acquire a steel products trading group, Novo Group, for $110.65 million, in a RTO deal. Novo Group's operations are largely based in Hong Kong, China and Singapore. Two companies in the group, Novo Commodities Pte Ltd and Novostal Pte Ltd, have received Global Traders Programme accreditation from International Enterprise Singapore.

The sale price is based on 10x Novo Group's FY2007 net profit after tax. Neocorp will pay for the purchase by issuing 3.69 billion new shares to the current owners of Novo Group, Dicky Yu Wing Keung and Chow Kin Wa. Meanwhile, Messrs Yu and Chow have agreed to loan Neocorp $3 million to pay for professional fees and other expenses associated with the acquisition. They have the option to convert the loan amount to 100 million new Neocorp shares at $0.03 a share.

 

The company, under judicial management, entered into a MOU where there is a RTO by a company in the business of steel trading.