Key Points of the Announcement

• Offeror: Advanced Systems Automation Limited (“ASA”) proposes a pre-conditional voluntary offer to acquire all issued and paid-up ordinary shares in ASTI Holdings Limited (“ASTI”), excluding treasury shares and those already owned by ASA.
• Pre-Conditions: The offer is subject to several pre-conditions, most notably the resumption of trading in ASTI shares or SGX-ST approval for the transfer of shares, ASA shareholder approval, and SGX-ST approval-in-principle for the offer transaction and issuance of new ASA shares as consideration.
• Offer Consideration: Shareholders of ASTI will receive two (2) new ASA shares for each ASTI share tendered, at an issue price of S\$0.005 per ASA share, representing a total consideration of S\$0.01 per ASTI share.
• Minimum Acceptance Condition: The offer will only proceed if ASA and its concert parties receive acceptances resulting in control of at least 50% of ASTI shares (excluding treasury shares).
• Potential for Compulsory Acquisition: If ASA garners acceptances exceeding 90% of ASTI shares, it may proceed to compulsory acquisition and delisting of ASTI.
• Share Price Impact: The offer price of S\$0.01 per share is at a 28.6% discount to ASTI’s last traded price of S\$0.014 before suspension in July 2022.
• Synergy & Strategic Intent: ASA intends to amalgamate the semiconductor businesses of both companies, unlock value via possible IPO or trade sale, and distribute proceeds or shares in-specie to ASA shareholders.

Detailed Report for Investors

Advanced Systems Automation Limited (ASA), a manufacturer of electromechanical components for the semiconductor and consumer electronics industries, has announced its intention to make a voluntary conditional offer to acquire ASTI Holdings Limited, a major player in semiconductor manufacturing services. This move, if successful, could have significant implications for both companies and their shareholders.

Pre-Conditions for the Offer

The offer is pre-conditional and will only be made if certain conditions are met within three months of the announcement date, or such other date as may be agreed with the Securities Industry Council. These conditions include:

• Resumption of trading in ASTI shares, or SGX-ST approval for transfer of shares.
• SGX-ST approval-in-principle for the offer and issuance of new ASA shares.
• ASA shareholder approval for the transaction.

If these pre-conditions are not met, the offer will not proceed, and ASA will make a formal announcement to that effect.

Offer Details

ASA proposes to issue two new ordinary shares for every ASTI share tendered, with an issue price of S\$0.005 per new ASA share. This values ASTI shares at S\$0.01 per share, which is a 28.6% discount to the last traded price of ASTI shares before suspension (S\$0.014 on 4 July 2022).

The new ASA shares will be fully paid, free of encumbrances, and rank pari passu with existing ASA shares. If ASTI declares any distributions after the announcement date, the offer consideration will be adjusted accordingly.

Important Points for ASTI Shareholders

• Liquidity and Exit Opportunity: Many ASTI shareholders, including retail investors and CPFIS participants, have been locked into the suspended stock since July 2022. The offer provides an exit opportunity without brokerage fees.
• Uncertainty Around Trading Resumption: While SGX-ST has no objection to ASTI’s application for resumption of trading, the actual date remains uncertain, and past exit offers have failed.
• Management Critique: ASA criticises the current ASTI board for failing to deliver on promises made to shareholders, including reviewing past management conduct and restoring value to shareholders. ASA also highlights costly and ultimately unsuccessful legal disputes initiated by ASTI against ASA.
• Post-Acquisition Plans: ASA intends to combine the companies’ semiconductor businesses, potentially list the enlarged entity or pursue a trade sale, and distribute the proceeds or shares to ASA shareholders.
• Delisting and Compulsory Acquisition: If ASA secures more than 90% of ASTI shares, it may trigger compulsory acquisition, delisting ASTI from SGX-ST, and shareholders who have not accepted the offer would receive the same consideration.
• No Intention to Restore Public Float: If public shareholding falls below 10% and trading is suspended, ASA does not intend to restore the public float or have trading reinstated.

Potential Price-Sensitive Implications

• Discounted Offer Price: The offer price is below the last traded price, potentially impacting perceived value for ASTI shareholders.
• Corporate Action and Strategic Change: If successful, the acquisition could unlock value by combining assets, improving operational efficiencies, and providing new avenues for growth.
• Delisting Risks: Shareholders may find themselves holding unlisted shares if the delisting proceeds, impacting liquidity and exit options.
• No Current Shareholding by ASA: As of the announcement date, ASA does not own or control any ASTI shares, indicating a full public acquisition.

Next Steps and Timeline

• If pre-conditions are fulfilled, a formal offer announcement will be made, followed by the despatch of offer documents to ASTI shareholders within 14 to 21 days.
• The offer will remain open for at least 28 days after posting the offer document.
• Shareholders are strongly advised to seek independent professional advice and exercise caution when dealing in ASTI shares.

Disclaimer

This article is for informational purposes only and does not constitute financial advice or an offer to buy or sell securities. Investors should consult their own financial advisors before making any investment decisions. The information contained herein is based on the latest available public disclosures and is subject to change. The author and publisher accept no liability for any losses incurred from reliance on this article.

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