UMS HOLDINGS LIMITED Company Registration No.: 200100340R
Singapore 499616
Tel: (65) 6543 2272
Fax: (65) 6543 0623
-
UMS inked agreement to subscribe for 10% equity of All Star Fortress Sdn. Bhd. ("ASF") enlarged shareholdings via issuance of new shares for a total consideration of RM0.145 million
-
UMS will extend to ASF secured, interest-bearing convertible loans of up to a total of USD7.5 million, which includes USD6.7 million for ASF to strengthen its capability and expand its manufacturing capacity to meet the long term needs of aerospace customers
-
UMS will be granted the option to convert balance loan amount into additional ordinary shares of ASF
-
Additionally, UMS will rent its Penang premises on a commercial basis to ASF
- This investment is part of the Group's strategy to diversify its revenue base beyond the semiconductor segment into another high growth sector
Under the Shareholders' Agreement, UMS' wholly-owned subsidiary, Ultimate Machining Solutions (M) Sdn Bhd ("Ultimate Machining Solutions") will subscribe for approximately 10 per cent of the enlarged share capital of ASF at par value, for a total consideration of RM145,000 in cash, on a willing buyer willing seller basis. The consideration will be funded from internal sources of UMS.
Under the Shareholders' Agreement, Ultimate Machining Solutions will make available to ASF up to USD7.5 million for the following purposes:
up to USD850,000.00 for working capital purposes;
up to USD1,700,000.00 to build a special process line; and
up to USD4,950,000.00 to purchase the necessary equipment and machines for its manufacturing of metallic components.
In connection with the proposed funding by UMS, UMS and ASF have entered into a loan agreement pursuant to which UMS will loan to ASF up to USD7.5 million ("Loan"). The Loan is interest-bearing at interest rates between three (3) per cent per annum to five (5) per cent per annum. In addition, the Loan is secured by assets of ASF, certain assets pledged by the individual shareholders of ASF and also personal guarantee of individual shareholders of ASF.
Further, pursuant to an option subscription agreement entered into between Ultimate Machining Solutions and ASF, the Group has been granted the option to subscribe for additional ordinary shares in the capital of ASF by converting the balance Loan amount given to the ASF. The option can be exercised at any point in time after one year, up till a maximum of 20 years subject to the revenue of ASF exceeding Ringgit Malaysia Two Million (RM2,000,000.00). The equity percentage for the option shares will depend largely on the accumulated profits of the Company from 1 January 2016 up to the exercise date; the accumulated profits generated is inversely related to the amount of option shares.
On top of providing financial support to ASF, the Group will also rent out part of its unutilized manufacturing facility to ASF on a commercial basis. Moreover, ASF will be compensating UMS for the costs and expenses incurred in providing the fixtures, fittings and basic infrastructures in the Penang's premises.
As such, the Group does not expect material capital expenditure in relation to its investment in ASF.
Commenting on the Group's latest business development, Mr. Andy Luong, Chief Executive Officer, UMS Holdings Limited said "We are excited with the prospects of this investment. In the short term, we foresee a slight boost to profitability as we can expect some interest income and rental revenue from this collaboration. Over the longer period, we intend to work closely with ASF to expand their footprint and become a sizeable player within the aerospace industry. The Group expects it will become the major shareholder of ASF in the years to come."
This latest investment is part of the Group's strategy to diversify beyond its traditional semiconductor business segment in order to achieve an alternative revenue source as well as to allow the Group to venture into a high potential growth sector within the aerospace industry.
According to a report by Airbus, air traffic will grow at 4.6 per cent annually1 in the next 20 years, requiring some 32,600 new passenger and dedicated freighter aircraft at a value of US$4.90 trillion. The large orders backlog faced by major aircraft makers have also resulted in stronger demand in the aerospace manufacturing supply chain. Additionally, ICF Analysis, a leading research and analysis firm, had also forecasted that the aircraft annual production value is expected to reach more than US$ 200 billion by 20242.
With the increasing trend of international aerospace players outsourcing more work as well as the Malaysian Government's efforts to further develop the local aerospace manufacturing industry, the Group believes that coupled with its support, the collaboration is in a good position to capture these strong growth potentials.
ASF is an aerospace metallic component manufacturing company based in Malaysia. It was incorporated to support the local aerospace supply chain as many of the international aerospace players such as Airbus, General Electric, Honeywell, Spirit Aerosystems, SAFRAN Messier-Bugati, SR Technics, Singapore Aerospace Manufacturing, THALES, Hamilton Sundstrand and many others have manufacturing presences in Malaysia. It is also one of the 20 local companies approved under the Malaysian Government's Economic Transformation Plan (ETP) to develop the local Aerospace manufacturing industry through grants, offset program and other incentives.
The company has obtained AS9100C certification, which enables it to approach various customers through their network and connection, and establish themselves in the industry.
#End of Release#
1 Report titled "Flying by Numbers 2015 2034" by Airbus
2 Presentation titled "Aerospace Production & Supply Chain Outlook" published by ICF International on 5 October 2015
ISSUED ON BEHALF OF UMS HOLDINGS LIMITED
BY CAPITAL ACCESS COMMUNICATIONS PTE LTD:
Edwin Lee
Email: edwinlee@capitalaccess.com.sg Mobile: +65 9660 7361
Incorporated in Singapore on January 17, 2001, UMS Holdings Limited is a one-stop strategic integration partner providing equipment manufacturing and engineering
UMS Holdings Limited issued this content on 27 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 27 January 2016 09:45:18 UTC
Original Document: http://umsgroup.listedcompany.com/newsroom/20160127_172544_558_8JBEHX8RDGQF8DCF.1.pdf
