Singapore Post’s (SingPost) associate, Shenzhen 4PX Information and Technology Co., Limited, (4PX) announced that it entered into various agreements with its existing shareholder, Zhejiang Cainiao Supply Chain Management Co., Limited (Cainiao) on Jan 19.
SingPost’s 19.75% stake in 4PX is held by its subsidiary, Quantium Solutions International Pte. Ltd (QSI).
Under the various agreements entered into between 4PX and Cainiao, the former will issue new shares in its capital to Cainiao. This is for the full and final settlement of all outstanding amounts under an existing RMB400 million ($78.6 million) loan extended by Cainiao to 4PX in 2018.
Upon completion of the loan capitalisation, QSI’s shares will remain unchanged although its equity interest in 4PX will be reduced to 17.61% in the latter’s enlarged share capital.
In connection with the loan capitalisation, QSI, Cainiao and the rest of 4PX’s shareholders have agreed to amend certain terms of the existing shareholders’ agreement.
Such amendments include a revision of the terms of a put option granted by Cainiao to QSI for the latter to sell any part of its equity interest in 4PX exceeding 10%, which is approximately 7.6% of QSI’s equity interest in 4PX. The amendments also include the grant of a new put option by Cainiao to QSI for the latter to sell the remaining 10% of its equity interest in 4PX to Cainiao, after the capitalisation of the existing Cainiao shareholder loan.
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Under the revised shareholders’ agreement, QSI may exercise the 7.6% option at its discretion. The exercise of the option is also conditional upon the completion of the loan capitalisation. Cainiao will pay a cash consideration of RMB251.3 million for QSI’s 7.6% stake. The amount was determined based on 4PX’s total valuation of RMB3.3 billion. QSI has further agreed to grant Cainiao a corresponding call option to acquire QSI’s 7.6% equity interest in 4PX on the same terms.
Based on SingPost’s unaudited financial statements for the 1HFY2022 ended Sept 30, 2022, the book value attributable to QSI’s 19.75% stake is $85.3 million.
In addition to the 7.6% option, Cainiao has also granted to QSI the 10% option which may be exercised by QSI at its discretion and again conditional upon completion of the loan capitalisation. The consideration payable by Cainiao for the 10% equity interest in 4PX is around RMB264.0 million. The consideration may be paid either in cash or via a transfer of shares held by Cainiao’s related companies in QSI to SingPost. QSI has also agreed to grant Cainiao a corresponding call option to acquire QSI’s 10% equity interest in 4PX on the same terms.
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The QSI 4PX options may be exercised together or individually within six months from the completion of the loan capitalisation.
If all the options are exercised, QSI will dispose of its entire stake in 4PX. Accordingly, the SingPost Group will no longer hold any interest in 4PX.
According to SingPost, the proposed disposal provides an opportunity for the group to realise and unlock value in its equity interest in 4PX held through QSI.
“The [group] will review and determine the use of the proceeds from the proposed disposal in the event it decides to exercise the QSI 4PX options or if Cainiao decides to exercise its call options on QSI’s equity interests in 4PX,” says SingPost in its Jan 20 statement.
Shares in SingPost closed at 56.5 cents on Jan 19.
