The former Singapore-listed LH Group was renamed Pacific Star Development on Feb 8 after it received shareholders’ approval for the $140 million reverse takeover (RTO) by the latter. The company started trading on the Singapore Exchange on Feb 16.

Established more than a decade ago, Pacific Star Development was a property investment management company focused on investing in and managing prime development projects in the Asean region. The two projects currently under development are Puteri Cove Residences in Iskandar Malaysia and The Posh Twelve in Tiwanon, Bangkok.

Glen Chan, CEO and managing director of the newly listed Pacific Star Development says the group will continue to focus on development projects in Asean to diversify their risks and revenue base.

According to Chan, an RTO is a process with more certainty compared with an initial public offering (IPO). Unlike an IPO, an RTO involves the acquisition of a listed company, often one that has no significant business operations or one whose existing business is on the decline.

Pacific Star Development first entered into a term sheet with LH Group last March. LH Group, a specialist contractor of aluminium works and vehicle parts, was listed on the Mainboard of SGX in 1994. Pacific Star Development will, however, be listed on Catalist instead of the Mainboard.

In its FY2016 results, LH Group announced that revenue was down 34.5% y-o-y. The company also reported a net loss for the second consecutive year. “As the business is not doing well and recording losses, we thought it would be ideal for us to do an RTO via [LH Group], as it’s also a construction company and a property-related business,” says Chan.

 

Chan says Pacific Star Development will continue to focus on development projects in Asean to ‘diversify our revenue base and our risks’

 

Key investors

As part of the RTO, LH Group raised $8.5 million through the conditional placement of 11.1 million new shares. The amount was 41.7% more than its minimum placement target of $6 million. The placement was said to have been “well supported” by Koh Brothers Group Limited (through its wholly-owned subsidiary); prominent businessmen affiliated with the Tang Group of Companies, owner and operator of the Dorsett Hospitality chain; Home Fix DIY; and Food Empire Holdings Limited. Together, they represent an aggregate of 5.825 million shares (57.5%) of the total applications received.

Part of the acquisition was made in cash ($16 million) and the issue of 132.5 million new shares at 80 cents each. The balance $18 million will be paid in cash and/or issuance of new shares, according to a Feb 15 announcement. The total issued share capital has increased to 158.43 million, including the 11 million placement shares and 132.5 million consideration shares.