Emerging Towns & Cities has entered into a joint venture agreement (JVA) to establish a JV company (JVCo), ETC Smart Builder Pte. Ltd.
ETC Smart Builder will be in the business of developing software, information technology (IT) solutions and provision of technical consulting related to smart cities. This includes the development and sales of BCA Green Mark application software, the development of solutions and consulting services for BCA Green Mark projects, as well as software as a service (SaaS) module application and consulting services in the field of architectural design and drawing.
The JVCo has an issued and paid-up share capital of $20,000 split into 20,000 ordinary shares. ETC and the company’s JV partner holds a respective stake of 51% and 49%.
The consideration by each of the parties in relation to the subscription of shares in the JVCo was satisfied fully in cash.
The investment was funded through internal resources and is not expected to have any material impact on the group’s earnings per share (EPS) or net tangible assets (NTA) per share for the FY2023 ending Dec 31.
The group’s JV partner is Dong Yanwei. Dong comes with over 18 years of experience in the IT and computer software industry. She also has over 12 years of experience in investments and venture capital. Dong is currently the CEO of REI Engineering Software Co. Ltd. in Dalian, China. She was introduced to the group by an unrelated third party, says Emerging Towns & Cities.
Further to its statement, Dong is said to have granted Emerging Towns & Cities a put option to require her to purchase its 51% stake in the JVCo. The group has also granted Dong a call option to require itself to sell its stake in the JVCo to her.
The call and put options are exercisable if the total revenue of the JVCo for the first two financial years come up to less than $3 million.
The option period will commence on Jan 1, 2025, which is the day after the end of the JVCo’s second FY. It will end seven months after the date of commencement.
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The option price is the cost of investment, including any capital contributed by Emerging Towns & Cities and from the shareholders’ loan. As such, the quantum of the option price will only be determinable at or around the time of the exercise of the options.
If the JVCo’s total revenue for its first two FYs is less than $3 million, or if the JVCo’s operational performance by the end of the second FY is deemed to be unsatisfactory by either party, either party may give written notice of the intention to take steps to wind up, liquidate or strike off the JVCo.
According to Emerging Towns & Cities, the group has been talking to various investors and professionals to divest its investment in Myanmar via the sale of its entire shareholdings in DAS Pte. Ltd.
Its entry into the JVA is in line with its strategy to work towards the resumption of the trading of its shares.
Shares in Emerging Towns & Cities last traded at 3.4 cents before they were suspended from trading.
