Mainboard-listed Citicode (formerly Advance SCT) announced today that it intends to acquire Livingstone Health (formerly Ardmore Consolidated) for a total consideration of up to $72 million.
Citicode, on July 29, entered into a conditional sale and purchase agreement with Livingstone Health on July 29 at a base consideration of $47 million with a deferred consideration of up to $25 million.
The total consideration will be paid by $3.5 million in cash, and the issuance and allotment of up to 342,500,000 new ordinary shares at an issue price of 20 cents in the capital of Citicode on a post-share consolidation basis.
Under the agreement, Citicode will acquire the entire issued and paid up share capital of Livingstone Health.
Once completed, the transaction will constitute a reverse takeover, which will mark a new phase of transformation for Citicode’s new executive chairman and CEO Teh Wing Kwan. Teh was appointed in June 2018.
Citicode will first consolidate its shares by a ratio of 500 existing shares to one, reducing its shares outstanding from 41.3 billion to 82.6 million. It will then issue the new ordinary shares to the vendors of Livingstone Health – ICH Capital, Dax Ng Yung Sern, and Chua Hshan Cher.
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The company says it needs to consolidate its shares on this scale to facilitate commercial discussions and execute the RTO as it has a market capitalisation of $41.3 million based on its last closing price of 0.1 cent.
Citicode will also transfer its listing from the mainboard to Singapore Exchange (SGX-ST)’s catalyst board.
The issuance of the consolidation shares to the vendors will enlarge Citicode’s post-consolidation shares outstanding up to 425.1 million shares if the deferred consideration is paid in full.
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Citicode says it will hold an extraordinary general meeting (EGM) to seek its shareholders’ approval for the proposed RTO.
Livingstone Health, which is a Singapore-based specialist healthcare service provider, has a paid-up capital of $3.3 million. It recorded net profit before tax (NPAT) of $1.9 million and revenue of $14.7 million for FY ended Dec 31, 2019.
Under its previous management, Advance SCT faced several lawsuits, and was placed under the watch-list of the SGX-ST in March 2015. The trading of the company’s shares was suspended from January 2016 to February 2018.
“With disruptions due to COVID-19 and an imminent recession, Citicode’s commodities trading activities face additional uncertainty, while its M&E projects have to contend with long gestation periods and supply chain disruptions. This deal can contribute to a sustainable turnaround for us. It will improve financial performance, reposition Citicode for future fund-raising and mitigate risks associated with our current businesses,” says Teh.
Livingstone Health’s Wilson Tay says, “The proposal for this RTO has come after careful evaluation that followed an intensive period of our restructuring, expansion and acquisition. We have a high level of confidence in [CEO] Wing Kwan, and believe that the Livingstone Health vision can be manifested across Singapore and ASEAN through this partnership with Citicode.”
Trading in shares of Citicode was halted since Monday (July 27), and will resume on Thursday (July 30).
