Metech International Announces Major Debt Capitalisation Plan, Potential Transfer of Controlling Interest

Key Highlights for Investors

• Debt Capitalisation Agreement: Metech International Limited has entered into a loan conversion agreement with Mr. Cao Shixuan (the “Lender”) to convert S\$1.5 million of an outstanding interest-free loan into equity through the issuance of 62,500,000 new ordinary shares at S\$0.024 per share.
• Potential Transfer of Controlling Interest: This conversion will increase the Lender’s shareholding from 6.69% to approximately 28.82% of the enlarged share capital, resulting in a transfer of controlling interest. This is a significant event and requires shareholder approval.
• Shareholder Approval Needed: The proposed issuance and transfer of controlling interest will be subject to approval at an upcoming Extraordinary General Meeting (EGM). The Lender and his associates will abstain from voting on the relevant resolutions.
• Company’s Financial Position: Metech reported a loss after tax of S\$0.47 million (including discontinued operations) for FY2025, negative working capital of S\$1.43 million, and a net liability position. The transaction aims to strengthen the capital base and improve the Group’s financial health.
• Extension of Loan Maturity: The maturity date of the remaining unutilised or unconvered loan amount is extended by six months.
• SGX Catalist Rule Compliance: The proposed transaction involves compliance with SGX Catalist Rules 803, 805, and 812, including requirements regarding transfer of controlling interest and issuance to substantial shareholders.
• Share Capital Impact: Upon completion, the Company’s share capital will increase from 201,010,200 to 263,510,200 shares.
• Financial Effects: The net tangible liability per share will improve from (0.69) cents to 0.04 cents. Loss per share will also improve from (0.26) cents to (0.19) cents.
• No Placement Agent: No placement agent was appointed for this transaction; the shares are issued directly to the Lender.
• Regulatory Approvals Required: The transaction is subject to various conditions precedent, including regulatory and shareholder approvals.
• Trading Caution: Shareholders are advised to exercise caution as the completion of the Debt Capitalisation is not assured and is subject to several conditions.

Details of the Debt Capitalisation Agreement

On 24 March 2026, Metech International Limited entered into a Debt Capitalisation Agreement with Mr. Cao Shixuan, an existing substantial shareholder and manager of a wholly-owned subsidiary. The agreement provides for the conversion of S\$1.5 million of outstanding loan into 62,500,000 new shares at S\$0.024 each, with the conversion price matching the volume weighted average price of the shares prior to the agreement.

The agreement also extends the maturity of the remaining unutilised portion of the loan by six months and specifies that the newly issued shares will rank pari passu with existing shares, including rights to dividends and transfers, and are free from encumbrances.

Why This Matters to Shareholders

• Potential Share Price Impact: The transfer of a controlling interest is a material event that could affect market confidence and the share price, especially as the Lender’s stake jumps to nearly 29%.
• Improved Financial Metrics: The conversion is expected to improve the company’s net tangible asset position and reduce its indebtedness, strengthening the balance sheet.
• Vote at the EGM: Shareholders will have the right to vote on this transaction, which is required by SGX rules before such a transfer and share issuance can be completed.
• Lender’s Background: Mr. Cao is a seasoned manager with over 20 years of experience in real estate, finance, crisis management, IT, media, and energy, and has held senior roles in prominent companies in Taiwan and China.
• No Immediate Cash Proceeds: The company will not receive new cash from this conversion, but will reduce debt and improve its net asset position.
• Substantial Shareholder Transactions: The issue of shares to a substantial shareholder requires higher scrutiny and specific approval, and Mr. Cao and his associates will abstain from voting on the relevant resolutions.
• Financial Risks Remain: Despite the improvement from this conversion, Metech remains in a challenging financial position, with an overall loss and previously negative working capital as of FY2025.

Conditions and Timeline

1. Shareholder approval at the upcoming EGM.
2. SGX-ST’s in-principle approval for the listing and quotation of the new shares.
3. All other necessary regulatory and contractual consents must be secured.
4. If the conditions are not met within six months, the agreement lapses and the loan will have to be renegotiated for repayment.

Directors’ Confirmation and Next Steps

The Board believes the Debt Capitalisation is in the best interests of the company and its shareholders, enabling the company to focus its cash flow on business operations rather than debt repayment. The company will make further announcements as the process progresses, including details of the EGM and regulatory approvals.

What Should Shareholders Do?

Shareholders are urged to exercise caution in trading Metech shares pending the outcome of these approvals and developments. The Debt Capitalisation could materially affect the company’s shareholding structure, control, and financial position.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Shareholders and investors should seek independent advice from financial, legal, or other professional advisors before making any decision regarding Metech International Limited. The completion of the proposed transaction is subject to various regulatory and shareholder approvals and is not guaranteed.

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