Reenova Investment Holding, which plans to sell its rare earth mining concession, is heading into an RTO deal that will see it transform into a lithium-ion battery company instead.
The target is 3DOM Singapore, which is a subsidiary of 3DOM Inc from Japan.
3DOM Inc was previously in a similar RTO deal with another SGX listed company Chaswood Resources.
Even though a sale and purchase agreement has been signed, the deal between 3DOM and Chaswood Resources was terminated on Nov 15.
“Both parties had experienced significant differences in perspective and approaches in regard to the implementation of the proposed acquisition resulting in the parties’ mutual agreement to terminate the outstanding agreements,” states Chaswood Resources in its termination announcement on Nov 15.
The terms of the RTO deal 3DOM is doing with Reenova has a key difference. The related expenses will now be picked up by Reenova, whereas under the agreement with Chaswood Resources, 3DOM is the one paying.
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That aside, similar to the deal announced with Chaswood Resources, Reenova will also be issuing new shares worth some US$1 billion to acquire control of 3DOM Singapore.
The new shares will be issued at 0.75 cents per share, a 150% premium Reenova’s last traded price of 0.3 cents before trading suspension last November.
Upon completion of the deal, 3DOM will end up owning 96.4% of the enlarged share capital of Reenova.
According to Reenova’s announcement, 3DOM’s business strategy is to let the parent company be at the centre of R&D while 3DOM Singapore will be the global centre for carrying out the business of commercialising the technology.
“3DOM believes the image of 3DOM can be enhanced by positioning Singapore as its global centre of technological excellence,” states Reenova in its SGX filing announcing this deal.
Reenova, for years, has been trying to get its tantalum rare earth project in Madagascar off the ground. However, because of the pandemic, it wasn't able to make meaningful progress. It was also unable to raise sufficient funding for further exploration and production.
On Nov 10, the company announced it will sell its stake in the concession to an entity called GRM Group for US$6 million. Upon completion of the sale, Reenova will become a shell company.
Separately, Reenova announced that it is borrowing $1.2 million from Evolve Capital in the form of convertible loans carrying an interest of 6%.
The funds will be used to pay for expenses to be incurred during the RTO process with 3DOM Singapore.
The money will be issued in three tranches of $300,000, $300,000 and $600,000.
The conversion is fixed at 0.07 cents and when fully converted, there will be just over 1.7 billion new shares, giving Evolve Capital a stake of 20.267% in Reenova.
Photo credit: An image for structural illustration / 3DOM (Singapore)
