TRANSCU IS acquiring a commercialization-ready nano-emulsion fuel system through a deal which involves cash injection that improves its financial position.
Forest Pine Group and Forest Pine Holdings (groups of companies controlled by non-executive vice-chairman and major shareholder, Mr Akihiko Matsumura, and his affiliated parties) are injecting the nano-emulsion fuel system business into Transcu as follows:
(1) Transcu will acquire 74.8% in Nanomizer Pte Ltd, which owns a technology incubator (NANOMIZER Inc) for pulverization and emulsification technology and patents.
NANOMIZER owns the (Nano-Emulsion Fuel System) NEFS technology that is able to reduce fuel consumption and improve combustion efficiency.
The result: cleaner emissions, substantially more than conventional emulsion fuels.
Forest Pine Group and Forest Pine Holdings have a total share ownership of 74.8% of Nanomizer Pte Ltd. This will be transferred to Transcu for a consideration of S$41 million worth of Transcu shares, which is a 60.1% discount to an independent valuation on Nanomizer.
(2) Forest Pine Group will inject cash of S$4 million up to S$12.2 million into Transcu as placement consideration for 461.5 million to 1.2 billion new Transcu shares.
(3) A minimum of S$2 million with an option of up to S$3 million of outstanding shareholders loan payable by Transcu to Forest Pine Group will be converted into shares, thereby reducing the debt level of Transcu.
(4) Mr Matsumura and the Forest Pine Group will collectively hold 54.8% and up to 58.9% in Transcu, depending on the total cash injection and loans converted, compared to Mr Matsumura’s current interest of 8.2%.
This acquisition improves Transcu’s financial position, and that will be helpful when applying for bank lines as well as other forms of fund raising, according to the CEO.
Transcu had a net loss of US$5.0 million for the six months ended 30 Sep 2012 and a cash balance of US$13,000 as at 30 Sep 2012.
”Some of the applications for Nanomizer’s NEFS include land and marine generators which are at pre-order testing at the sites of prospective customers,” said CEO Lawrence Komo during an exclusive interview with NextInsight recently.
Financial Impact of Asset & Cash Injection
Even with the minimum subscription of 461.5 million shares by Forest Pine Group, Transcu’s balance sheet significantly improves as follows:
1) NTA multiplies more than 4 times from 16 US cents to 67.9 US cents
2) Loss per share is halved from 50 US cents to 25 US cents
3) Gearing falls from 1.09 times to 0.14 times
Transcu’s issued share capital will also double from 3.5 billion shares to reach 7.1 billion shares.
In January, Transcu cut down its rental costs by relocating from its Singapore Land Tower office in Raffles Place to The Actuary in Toa Payoh.
With the cash injection, it expects to take the commercialization of NANOMIZER’s technology to fruition, pay existing suppliers, as well as invest in capital expenditure and inventory.