CATALIST-LISTED pain-care medical services group Singapore Paincare Holdings has entered into a conditional sale and purchase agreement to buy 40 per cent of KCS Anaesthesia Services for S$2.4 million.
KCS Anaesthesia Services, a Singapore-based company that provides anaesthesia services and procedures, is fully owned by licensed anaesthesiologist Kong Chee Seng.
As part of the proposed acquisition, Singapore Paincare has entered into a contract with Dr Kong to employ him as an executive director and anaesthesiologist of KCS Anaesthesia Services.
Based on unaudited financial statements for the year ended Feb 29, 2020, the profit before income tax and net profit after tax of KCS were S$1.27 million and S$1.07 million respectively.
The net tangible asset value and net asset value as at Feb 29, 2020 were both S$500,782.
Under a put option, Singapore Paincare can require Dr Kong to purchase all its shares at the initial purchase price, plus an interest of 5 per cent per annum for three financial years. The interest of 5 per cent per annum is based on the past average cost of borrowings from banks.
The company can exercise this exit option if KCS fails to meet an aggregate net operating profit after tax of at least S$3 million for the period of March 1, 2020 to Feb 28, 2023.
Singapore Paincare also has a call option, where Dr Kong will be required to sell all his shares to the company, that it can exercise any time during the three calendar months after Feb 28, 2023.
The exercise price per share is eight times the average earnings per ordinary share of KCS for the three financial years, ending on Feb 28, 2023.
The acquisition will be funded with net proceeds from Singapore Paincare's initial public offering. The group said the deal is part of its strategy to expand its business locally to become a one-stop centre for pain care treatment.
The counter ended trading at S$0.20 on Monday, down 1.5 Singapore cents or 6.98 per cent.