Mainboard-listed Union Steel Holdings has acquired 680 million shares – or a 29.4% stake – in fellow Mainboard-listed Eneco Energy R14 for a consideration of up to $7.48 million or 1.1 cents per share. The acquisition was made on Nov 22 and will be funded by internal resources, says Union Steel.
The consideration factored in a book value of $5.79 million attributable to the 680 million shares based on Eneco’s latest financial statements for the period ended June 30. The amount also factors in the trading activity of the shares in Eneco Energy including the volume weighted average price (VWAP) of Eneco Energy’s shares for the last one month before the acquisition.
Eneco Energy is the holding company of logistics solutions provider Richland Logistics Services in Singapore. The company has been on SGX’s watch-list since Dec 3, 2019, after it posted three straight years of losses on June 14, 2019. The company was to have fulfilled the requirements under rule 1314 of the listing manual to be removed from the watch-list. The deadline was extended to Dec 1 this year.
Up till 2019, Eneco Energy was known as Ramba Energy, focusing on oil exploration and production in Indonesia. Its former CEO Aditya Wisnuwardana Seky Soeryadjaya was, on March 8, reprimanded by SGX's Listing Disciplinary Committee for not disclosing the expiry of a material permit to explore and produce oil. He was also found to have circumvented internal protocols by paying a vendor without the approval of his board. Aditya is not to be either a director nor a key executive of Singapore-listed companies for two and a half years with effect from Feb this year. In recent years, as it moves to put the energy business behind, Eneco Energy has raised new funds and appointed new directors.
For the half year ended June 30, Eneco Energy recorded a loss of $406,000, versus $227,000 in the year-earlier period. Revenue dipped slightly by 2% to $15.2 million in this same period. On the other hand, Union Steel reported FY2024 earnings of $12.8 million, up 16.4% over the year ended June 30, 2023.
According to Union Steel, the group has been actively looking for complementary businesses that align with its existing portfolio as well as businesses that have been demonstrating growth potential and sustainable returns. Eneco Energy’s business is “complementary” to the group, adds Union Steel, as the latter can explore “potential cross-selling and cost mutualisation opportunities”.
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Both companies may also work together to consider ways to utilise Eneco’s Richland Logistics business to streamline Union Steel’s supply chain logistics operations among other factors.
Furthermore, Eneco Energy’s listing status offers “potential opportunities” to enhance Union Steel’s market presence and strategic reach.
Based on Union Steel’s calculations, the net losses attributable to the assets acquired or disposed of compared to its net profits is -1.92%.
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On a pro forma basis, had the acquisition been completed on June 30, the group’s net tangible assets (NTA) per share would have remained unchanged at 67.95 cents.
Union Steel’s earnings per share (EPS) had the acquisition been completed on July 1, 2023, would have been at 10.57 cents from 10.78 cents originally.
The acquisition constitutes a “discloseable transaction” under chapter 10 of the Singapore Exchange S68 ’s (SGX) listing manual.
SAC Capital Private Limited was Union Steel's placement advisor. It procured the sellers of the shares and facilitated the married trade transactions for the shares between Union Steel and Eneco Energy.
Shares in Union Steel last traded at 64 cents before its trading halt on the morning of Nov 22.
