Velosi Acquires Interest in K2 for SGD 5.6 Million
Velosi has acquired a 65% interest in K2 Specialist Services Pte Ltd ("K2"), for an aggregate consideration of SGD5.6 million (approximately £1.87 million). K2, incorporated in Singapore, provides a range of inspection, testing, integrity management and engineering services to the oil and gas industry throughout Asia Pacific, Middle East and Central Asia.
"In line with our strategy of increasing our market share in existing markets and expanding our service offering, the acquisition of K2 increases our profile, presence and market share in Asia Pacific, Middle East and Central Asia," said Dr. Nabil Abdul Jalil, CEO of Velosi. "K2 significantly adds to, and extends our reach for, our existing rope access services. Additionally, K2's Rope Access Training School, one of the largest in the world, is an extremely valuable addition to the Group's services."
The consideration is to be satisfied by SGD2.80 million (approximately £0.94 million) in cash and the balance through the issue of new ordinary shares in Velosi (the "K2 Consideration Shares"). The K2 Consideration Shares will be issued in three tranches subject to the achievement of certain performance targets by K2 in the three financial years ending 31 December 2009. The tranches will comprise such a number of new ordinary shares in Velosi as equates to SGD0.7 million, SGD0.93 million and SGD1.17 million in value based on the weighted average closing share price of Velosi's shares in the three days prior to the audit for the respective financial period. In addition, there is a call and put option over the remaining 35% interest in K2 for an amount based on a multiple of five times the audited profit after tax and minority interests for the year preceding the exercise of the option. The vendors of K2 have guaranteed that they will achieve an aggregate profit after tax and minority interests of at least SGD4.00 million (approximately £1.34 million) over the three financial years ending 31 December 2009.
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