Intraco to acquire 51% of digital asset platform MHC Singapore

SINGAPORE (BUSINESS TIMES) – Motherboard-listed trading firm Intraco has agreed to acquire a 51% stake worth around $47.2 million in digital asset platform MHC Singapore, a the company announced in a stock market filing on Monday (February 7).

This comes after the companies entered into a Binding Framework Agreement (HOA) on December 13, 2021, which was revised into a second binding HOA on December 22, 2021.

MHC Singapore, which will be incorporated in Singapore by Australian entrepreneurs Mark Carnegie and Sergei Sergienko in equal shares, will take over the business and relevant assets of Australian digital asset platform MHC Digital Group.

The transaction is subject to shareholder approval, which will be sought, among other things, at a forthcoming extraordinary general meeting.

The proposed transaction is also conditional upon the fulfillment of certain conditions – including that MHC Singapore achieve consolidated net profit after tax of at least $18.5 million over 12 months within 24 months of the agreement to acquire the 7 February. That’s down from the $20 million goal in the second HOA, which had already been cut from $24 million in the first HOA.

Other changes in the new agreement include the reduction of the issue of warrants in payment to 52.5 million from 58 million, each giving the right to subscribe for 1 new share of the company. The issue of 42 million new shares in payment at an issue price of 50 centimes remains unchanged. The two represent a total consideration of approximately $47.2 million.

The Warrants will not be listed or traded on the Singapore Stock Exchange and will be exercisable by each seller at any time within five years, rather than seven years, from the date of issue. Unless Mr. Carnegie and Mr. Sergienko each own more than 14.5% of the company.

There is no significant historical book value, net tangible asset value or net profit attributable to the shares or assets, as MHC Singapore will be a new company to be incorporated and the scope of the assets is not finalized, notes the press release.

Mr. Carnegie and Mr. Sergienko also need not apply to serve on Intraco’s board of directors if they each hold shares and/or convertible securities representing 15% or more of the total issued share capital.

In addition, Intraco has agreed to issue 40 million warrants at an exercise price of 50 cents to Mr. Wong Fong Fui, Chairman and CEO of Boustead Singapore Group. He previously presented MHC Digital Group and the deal to Intraco.

Mr. Mak Lye Mun, Chairman and Independent Director of Intraco, is also an Independent Director of Boustead.

The warrants may be exercised at any time within four years from the date of issue, unless Mr. Wong owns more than 14.5% of the company or the outstanding share capital of ‘Intraco only exceeds 283 million shares.

The group intends to expand its fund management offerings and integrate new trading strategies into the development of traditional OTC execution and market making services.

It also plans to provide corporate finance advisory services focused on leveraging an expanded balance sheet to provide a gateway for institutional investors to deploy capital into traditional financial products with exposure to the metaverse ecosystem. and digital assets.

Intraco shares were trading up 1 cent or 2.2% at 47.5 cents at 1:06 p.m. after the trading halt was lifted following the announcement.

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