UPDATE: Maxi-Cash plans to enter deal for credit line of up to S$50 million from Aspial

Maxi-Cash outlet in Singapore’s Little India neighborhood; taken October 2018.Maxi-Cash outlet in Singapore’s Little India neighborhood.

This article was originally published on Wednesday, 10 July 2019 at 23:48 SGT; it has since been updated to clarify the acquisition price for Aspial Property and to include comment from Aspial.

Maxi-Cash Financial Services plans to enter a revolving loan agreement for Aspial Corp. to provide a credit line of up to S$50 million, the pawn-shop operator said in a filing to SGX Wednesday.

In addition, Maxi-Cash also entered a deal to acquire all of Aspial Property Investment from Aspial, the filing said. The consideration due at closing is S$5.38 million, while the properties were valued at S$33.8 million, Maxi-Cash said.

In an email, a representative of Aspial told Shenton Wire the purchase consideration was for the shares of Aspial Property, based on the adjusted net asset value, and not for the properties themselves.

Maxi-Cash didn’t immediately return Shenton Wire’s emailed request for clarification.

Aspial Property, which is mainly a real estate investor, has an issued and paid-up capital of S$2 million, the filing said, adding it owns six investment properties and leases some of those properties’ units to Maxi-Cash.

Maxi-Cash said the proposed acquisition is in line with strategic plans to acquire an asset for potential capital gain, while potentially using it for its existing pawnbroking and retail businesses.

The loan proceeds will be used to finance Maxi-Cash’s general working capital and/or repay existing loans, the pawn-shop operator said. The loan term won’t exceed five years and the interest rate will be Aspial’s prevailing cost of funds at the time the funds are drawn down, plus 0.5 percentage point, or 7.14 percent currently, the filing said.

“The entry into the loan agreement will give the company the ability and flexibility to quickly tap on the funds should the need arises, without the need to provide any security, charge or mortgage over assets,” Maxi-Cash said. “The interest rate charged by Aspial for the provision of the loans is, in the company’s view, no less favourable than the rates charged by third party financial institutions.”

Aspial is a controlling shareholder of Maxi-Cash with an around 64.72 percent stake, the filing said.

Maxi-Cash will convene an extraordinary general meeting to seek shareholders’ approval for the deals, the filing said. In a separate filing, Aspial said it would also call an EGM for shareholder approval of the deal as it is considered an interested person transaction.

Aspial said it expected to benefit from the loan agreement as it would be able to use its excess cash flows and obtain an additional revenue stream.

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