Federal International (2000) Ltd Enters Into Binding Term Sheet to Divest Interest in PT Gunanusa Utama Fabricators

Summary of the Proposed Transaction

Federal International (2000) Ltd (“Federal” or the “Company”) has announced a significant corporate move: a binding term sheet was entered on 5 December 2025 for the disposal of its entire 30% equity stake (43,220 shares) in PT Gunanusa Utama Fabricators (“PTG”) to Mr. Yafin Tandiono Tan, a substantial shareholder of the Company and a prominent industry player. This transaction also involves the full and final settlement of USD 13.26 million in debt owed by PTG to the Federal Group. The total consideration for the divestment and debt settlement is valued at USD 18.91 million, to be paid in a mix of cash and shares of PT Superkrane Mitra Utama Tbk (“SK”), a listed Indonesian heavy equipment solutions provider.

Key Transaction Details

• Sale of Shares: 43,220 shares (30% stake) in PTG.
• Purchaser: Mr. Yafin Tandiono Tan, who is also a 12.08% shareholder of Federal and a controlling shareholder in PTG’s majority owner, PT Saga Investama Sedaya (“Saga”).
• Total Consideration: USD 18,908,000, comprising:
  • USD 10,500,000 in cash
  • 200,000,000 shares in SK at IDR 700 per share (valued at USD 8,408,000 based on 30-day average closing price)
• Debt Settlement: Settlement of USD 13.26 million owed by PTG to the Group.
• Post-transaction: Federal will cease to be a shareholder of PTG but will nearly double its equity interest in SK to 408,813,499 shares, giving it the right to appoint a commissioner to SK’s Board of Commissioners.
• Moratorium: Federal is subject to a 12-month moratorium on the disposal of SK shares (except to affiliates).

Strategic Rationale and Shareholder Implications

• Strategic Divestment: The Board views the divestment as timely due to limited ongoing benefits from PTG, whose management is focusing on Indonesian domestic projects that restrict foreign procurement, thus curtailing Federal’s future involvement.
• Debt Recovery: The transaction enables the full and early recovery of a significant, previously outstanding debt from PTG.
• Shareholding Changes: Following the transaction, Federal will significantly increase its holding in SK, a listed company, thus enhancing liquidity and future strategic options.

Financial Effects and Price Sensitivity

• Gain on Disposal:
  • Value of Sale Shares: USD 5.65 million (SGD 7.32 million)
  • Book Value: SGD 5.76 million (as at 30 Jun 2025)
  • Estimated Gain: SGD 1.37 million after foreign exchange translation
• Significant Transaction: Under SGX Listing Manual, the transaction is classified as a “major transaction” (relative figures: 35.80% of group profits, 87.12% of market capitalization), requiring shareholder approval at an EGM.
• Pro Forma Financial Impact (based on FY2024):
  • NTA per share: Increases from 47.47 to 49.30 cents
  • EPS: Rises from 2.76 to 4.67 cents
• Use of Proceeds: The USD 10.5 million cash will be used for working capital and future investments.

Other Important Terms

• Conditions Precedent: Subject to regulatory, shareholder, and SGX approvals, as well as satisfactory completion of definitive agreements.
• Longstop Date: Transaction completion deadline set for 30 June 2026, unless otherwise agreed.
• Termination: Term Sheet terminates on execution of definitive agreements or by written notice with a minimum of three days’ notice.
• No Service Contracts: No new Board or service appointments in connection with the deal.
• Directors’ Responsibility: Directors confirm accuracy and completeness of disclosed information.

Shareholder and Market Considerations

This transaction is highly price-sensitive: The significant cash inflow, improvement in financial metrics, and shift in business focus away from PTG (where growth prospects are now limited) to a larger stake in a listed Indonesian industrial group (SK) are all factors that could materially affect Federal International’s share price. Investors should also note the potential for enhanced liquidity and strategic flexibility arising from the increased holding in SK shares. The requirement for shareholder approval and the scale of the deal relative to the company’s market capitalization further underscore its importance.

The Company intends to convene an Extraordinary General Meeting (EGM) to seek shareholder approval unless a waiver is granted by SGX. Details will be sent to shareholders in the circular for the EGM.

Cautionary Note

Shareholders and potential investors are urged to exercise caution when dealing in the Company’s securities. The transaction remains subject to regulatory and shareholder approvals, and there may be changes during the finalization of definitive agreements.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should consult their stockbrokers, bankers, solicitors, accountants, or other professional advisers before making any investment decisions related to Federal International (2000) Ltd. The information is based on public disclosures as of the date of this article and may be subject to change.

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