Libra Group has entered a legally binding letter of intent for potential investor Tianci International to invest S$2 million in cash for an at least 70 percent stake via the issuance of new shares, the company said in a filing to SGX Wednesday.
“If the proposed investment materialises, the company will be able to resolve the outstanding debts owed to its creditors,” Libra said.
Around S$1 million of the proposed investment will be used to pay creditors under its scheme of arrangement for financial restructuring, which could include issuing new shares of up to 5 percent of the enlarged share capital, the filing said. The remainder of the proposed investment earmarked to repay preferential debts and to settle restructuring expenses, excluded debts and the temporary financing, which will be an interest-free S$300,000 financing, the filing said.
The temporary financing, unless repaid by the proposed investment, will be repaid by issuing new shares in Libra, the filing said.
Tianci plans to have Libra become a supplier of building materials to Singapore’s construction industry, with the deal to potentially include injecting new businesses, the filing said. Tianci will use its pre-existing network in the industry to advance the objective, the filing said.
However, even with the injection of new businesses, the proposed investment is not intended to be a reverse takeover, Libra said.
Tianci and Libra have agreed to negotiate and finalise a deal by 31 October, the filing said.
The deal is contingent upon Libra obtaining shareholder and regulator approvals, the filing said.
Libra has four operating segments: Investment holding, mechanical and electrical, manufacturing and building and construction services, according to its Reuters profile. The investment holding segment invests in property. The mechanical and electrical segment includes contracting and installing air-conditioning and mechanical ventilation (ACMV), fire alarms, electrical systems and plumbing. The manufacturing division makes ACMV ducts and related products. The building segment includes general contracting.