KTL to Buy 20% Stake in South Korea's Dae Kwang to Expand into North Asia
Ropes and rigging specialist KTL Global Limited (KTL Global, and together with its subsidiaries, the Group) announced Thursday that it plans to acquire a 20 percent-stake in Korean rigging specialist, Dae Kwang Co. Ltd. (Dae Kwang), for $5.0 million to accelerate its push into the Korean offshore and marine industry.
Singapore-based SGX-listed KTL Global said that the proposed stake in Dae Kwang – which manufactures and supplies ropes, lifting and rigging equipment as well as provides mooring and spooling services for Korea’s shipyards and international customers – will help the Group expand in North Asia, in line with its strategic direction to widen its global footprint.
Founded in 1990 and headquartered in Ulsan, Dae Kwang is one of Korea’s leading rigging equipment companies and is accredited with the ISO 9001:2000, ISO 14001, OHSAS 18001 certifications. Dae Kwang, which is currently constructing a new 1.076 million square feet (100,000 square meter) facility, was awarded the prestigious “Order of Industrial Service Merit” by the Ministry of Patriots and Veterans Affairs in March.
Under the terms of the proposed acquisition, the consideration will be settled through two cash tranches of $0.3 million and $3.4 million, respectively, as well as via the issue of new KTL Global shares valued at $1.2 million. KTL Global will fund the cash portions from internal resources and proceeds from sale of machinery by the Group to Dae Kwang. KTL Global currently has an issued share capital base of 233,075,228 shares.
For the financial year ended Dec. 31, 2014, Dae Kwang recorded net profit after tax of $598,000 on revenue of $27.0 million. Upon completing the proposed acquisition, KTL Global will be able to equity account Dae Kwang’s profit.
KTL Global intends to leverage Dae Kwang’s network and customer base to pursue accelerated growth through provision of heavy lift slings and managed services – which typically offer higher gross margins. In addition, Dae Kwang’s new facility that is expected to be completed by end 2015 will allow the Group to take on larger-scale, higher-value projects.
Wilson Tan, CEO of KTL Global, said, “Korea is a major shipbuilding market with significant presence in the global offshore and marine sector. By taking a strategic stake in a well-established player in the ropes and rigging sector we will gain a major foothold in Korea, which will also serve as a springboard to our expansion in North Asia.”
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