AVI-TECH HOLDINGS Enters into Strategic Subscription Agreement with Create Technologies

Major Transaction Signals Significant Expansion, Potentially Impacting Shareholder Value

Introduction and Transaction Summary

AVI-TECH Holdings Limited (“AVI-TECH” or “the Company”) has entered into a binding Subscription Agreement with Create Technologies Pte. Ltd. (“Create”) as part of a proposed strategic transaction. This follows an earlier term sheet announced on 15 December 2025. The agreement marks AVI-TECH’s intention to subscribe for 85,714 new ordinary shares in Create, representing approximately 30% of the enlarged share capital for a total consideration of S\$2 million.

Create, with an issued and paid-up capital of S\$200,000, is currently fully owned by Ge Weifeng and Huai Chaohui. Post-transaction, AVI-TECH will become a significant minority shareholder, gaining a strategic foothold in the technology sector through this high-growth company.

Key Terms and Conditions

• Subscription Price: S\$2,000,000 for 85,714 new shares, constituting 30% of Create’s enlarged capital base.
• Conditions Precedent:
  • Satisfactory completion of due diligence (financial, operational, legal) by AVI-TECH.
  • Execution of a legal and binding shareholders’ agreement among AVI-TECH, Create, and the existing shareholders.
  • All required regulatory and shareholder approvals must be obtained, with terms acceptable to AVI-TECH.
• Structure: A diagram of the transaction structure is provided in the report’s Annex A.

Put and Call Option Mechanism

The transaction involves a complex framework of put and call options that allow both AVI-TECH and Create’s existing shareholders to increase or decrease their stakes based on Create’s financial performance. These options are tied to revenue and profitability milestones for the fiscal years 2026 and 2027, with corresponding exercise periods and purchase prices. Notably:

• Option Milestones:
  • Condition 1: Revenue of at least S\$1 million for H1 2026.
  • Condition 2: Revenue of S\$5.5 million and net profit after tax of at least 10% for FY2026.
  • Condition 3: Revenue of S\$10 million and net profit after tax of at least 10% for FY2027.
  • Condition 4: Revenue of S\$15.5 million and net profit after tax of at least 10% for FY2027, or aggregated targets if previous milestones are not met.
• Option Prices and Settlement:
  • Option and discounted prices are determined by multipliers on Create’s actual revenues, with caps for each option (e.g., S\$3.15 million for 2026, S\$13.72 million for 2027), and payable in a mix of cash and AVI-TECH shares (at fixed values per share).
  • Put and call options ensure both parties have flexibility to buy or sell the remaining shares in Create depending on performance.
  • Moratorium: Any AVI-TECH shares received by Ge Weifeng as part of the consideration are subject to a three-year lock-up period.

Financial Effects and Major Transaction Classification

The transaction has substantial financial implications for AVI-TECH, potentially qualifying as a major transaction under SGX Listing Rules. Key financial effects include:

• Net Profit Impact: The net profits attributable to the acquired assets (Create) are 234% of AVI-TECH’s latest full-year net profits, highlighting the deal’s profitability and magnitude.
• Consideration vs. Market Capitalisation: The maximum consideration of S\$18.87 million is 61% of AVI-TECH’s market capitalisation (S\$31.13 million as at 4 February 2026).
• Dilution: The number of new shares to be potentially issued as consideration is equivalent to 18% of the Company’s current issued share capital.
• NTA and NAV Per Share:
  • Net Tangible Assets (NTA) per share decreases from 29.76 cents to 16.57 cents post-transaction.
  • Net Asset Value (NAV) per share decreases from 29.76 cents to 25.86 cents.
• Earnings Per Share (EPS): EPS would increase significantly, from 0.39 cents to 1.03 cents, based on pro forma numbers, reflecting the profitability of the acquisition.

As one or more of these relative figures exceeds the 20% threshold, the transaction is classified as a “major transaction” and requires approval from shareholders at a forthcoming Extraordinary General Meeting (EGM).

Strategic Rationale

The acquisition is positioned as a move into a rapidly growing technological field—high-precision positioning, tracking, and structural-monitoring solutions. With rising global demand and the increasing adoption of smart infrastructure, the management expects the transaction to:

• Diversify and enlarge AVI-TECH’s earnings base.
• Potentially boost market capitalisation and shareholder value.
• Enhance investor interest and share liquidity.
• Position AVI-TECH to capitalise on future expansion opportunities in a high-growth sector.

What Shareholders Need to Know

• This is a price-sensitive transaction: It is a major transaction with the potential to materially affect AVI-TECH’s financials, share capital structure, and business outlook.
• Shareholder Approval Required: The deal cannot proceed without the approval of shareholders at an EGM. All details and the financial advisor’s opinion will be provided in a circular before the meeting.
• Significant Dilution and Financial Effects: Shareholders should note the dilution (18% increase in shares), the drop in NTA/NAV per share, but also a substantial increase in EPS.
• Potential Upside and Risks: The deal’s attractiveness depends on Create achieving aggressive revenue and profit milestones. The complex option structure provides downside protection but also introduces execution risks.
• Moratorium on Consideration Shares: Any shares issued to Create’s founder as part of the acquisition will be under a three-year lock-up, aligning interests with long-term performance.
• Availability of Documents: The Subscription Agreement and draft Shareholders’ Agreement are available for inspection at AVI-TECH’s registered office for three months from the date of the announcement.

Next Steps and Caution

• Shareholders should await the EGM circular for full details and exercise caution in dealing with their shares pending further developments.
• The completion of the transaction is subject to various conditions, and there is no certainty it will proceed to completion.

Financial Adviser

W Capital Markets Pte. Ltd. is acting as the exclusive financial adviser for AVI-TECH in this transaction.

Directors’ Interests

The Company has confirmed that, save for their shareholdings, none of the directors or substantial shareholders has any direct or indirect interest in the transaction.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Shareholders and potential investors are strongly advised to read all official announcements, the forthcoming circular, and consult their professional advisers before making any investment decisions. The completion of the proposed transaction is subject to several conditions and may not proceed as described.

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