Likely delay in $2.7b Rowsley energy deal

Lee Su Shyan, Assistant Money Editor
Mon, Aug 27, 2007
The Straits Times



A $2.7 BILLION mega deal unveiled by investment holding company Rowsley in May, which left many investors unconvinced, looks to have hit a snag.
Earlier in May, mainboard-listed Rowsley said it would issue 18 billion new shares at 15 cents each in return for taking over Perfect Field, a Jilin-based company that makes solar energy panels.

The value of the shares gave Rowsley an estimated $2.7 billion in market capitalisation, making it the largest reverse takeover in Singapore's corporate history.


Other than the size of the deal, what also made news was that former remisier king Peter Lim, a substantial shareholder of Rowsley, said he would put up $150 million to subscribe to new shares of Rowsley.

Yesterday in a statement, Rowsley chief executive officer Koh Kim Huat said the company 'is currently conducting due diligence on the target group'.

'Based on information made available to it up to the date here of, the company notes that there has been a delay on the part of the target group in meeting certain expected production capacity milestones,' he said.

It is not clear what these 'milestones' are, but Rowsley mentioned earlier in May several conditions that needed to be fulfilled before the deal could go through.

Mr Koh had said one of these conditions was for Perfect Field's solar energy facility to produce 100 megawatts by October.

Before the deal is closed, Perfect Field must also demonstrate that it has three months of firm orders for its products.

Another condition is that for the financial year ended June 30 this year, Perfect Field must turn in profits of 70 million yuan (S$14.1 million).

What stoked investors' scepticism was Perfect Field's promise of a massive profit guarantee of $300 million for each of the three financial years up to June 30, 2010.

Now, it looks as if investors will be able to be updated only at the end of next month.

Mr Koh said Rowsley 'is further investigating the delay to assess its impact on the acquisition'.

He added that 'the company expects to update shareholders on the status through an announcement by end-September'.

Last month, shares of Rowsley surged to a high of 38.5 cents, but they have since sagged. Last Friday, the counter had weakened to 23 cents.

sushyan@sph.com.sg


Still hanging

ROWSLEY, under Mr Koh (left), has listed several conditions that need to be fulfilled before the deal can go through.

The investment firm expects Perfect Field's solar energy facility to produce 100 megawatts by around October.

Perfect Field must also demonstrate that it has three months of firm orders.

Another condition is that for the financial year ended June 30 this year, Perfect Field must turn in profits of 70 million yuan (S$14.1 million).