United Envirotech inks S$40m deal in China
Here's how it will finance its investment projects.
According to OCBC Investment Research, United Envirotech Ltd has recently inked an agreement worth RMB200m (S$40m) with the local government of Siyang County, Jiangsu Province, China for TOT (Transfer-Operate-Transfer) and BOT (Built-Operate-Transfer) projects in an industrial park for the textile industry.
Here's more:
For the TOT deal (worth RMB70m), UEL will acquire the 30-year concession rights to operate a textile and mixed industrial waste-water treatment plant with 40k m3/day capacity (Phase 1 will be operational by Jun 2013) and add another 80k m3/day capacity at a later stage (Phase 2).
For the BOT project (worth RMB130m for Phase 1), UEL will use its MBR (Membrane Bio-reactor) technology to treat and recycle 60k m3/day of textile industrial wastewater; it will also construct and operate a 50k m3/day industrial water supply plant.
Management intends to finance its latest investment using proceeds from the previous convertible bond issue to KRR and bank financing.
Based on its usual 40% equity/60% debt financing model, UEL would need around S$5.6m for Phase 1 of the TOT project, which should not be an issue as it is currently sitting on ~S$63.2m of cash (as at 31 Dec 2012).
UEL would need around S$26m for the BOT project; but the financing needs are likely to be staggered as payout will be based on completion.
In addition, KKR will be injecting another US$40m into the company following the successful placement of 98.5m new shares at S$0.50 each.
Upon completion, KKR will have a direct interest of 45.2% on a fully diluted basis (assuming full conversion of US$113.8m of convertible bonds into shares at S$0.45 each).