US company to buy SeD’s IM subsidiary for US$700mil

• Proposed transaction will allow SeD’s HotApps subsidiary to tap US capital market
• SeD to own FIE, which in turn will hold HotApps as a wholly owned subsidiary

FAIRFIELD, Connecticut-based Fragmented Industry Exchange Inc (FIE) intends to acquire a wholly-owned instant messaging (IM) software subsidiary of Singapore eDevelopment Ltd (SeD) for US$700 million in shares and bonds, SeD has announced.
 
FIE is pending quotation on an over-the-counter bulletin board (OTCBB), while SeD is listed on the SGX Catalist exchange in Singapore. The OTCBB is an electronic inter-dealer quotation system facilitated through the US Financial Industry Regulatory Authority.
 
In a statement, SeD said the proposed transaction will allow its HotApps International Pte Ltd subsidiary to tap the US capital market, while also facilitating the launch of the HotApp IM and e-commerce mobile application in the North and South America.
 
SeD acquired HotApps last month and plans to launch it in 24 countries, including Singapore, before year-end.
 
SeD has entered into a term sheet for OTCBB-bound FIE to acquire HotApps for one million new shares at US$10 each (US$10 million) and US$690 million worth of zero-coupon perpetual bonds (with a conversion price of US$10 each).
 
The proposed transaction, upon completion, will result in SeD owning 99.84% of FIE assuming full conversion of the bonds and the exercise of a call option, and also assuming FIE does not issue any new shares, SeD said in its statement. FIE will in turn hold HotApps as a wholly owned subsidiary.
 
SeD said the US$700 million consideration was derived on a willing-seller, willing-buyer basis after taking into account its internal analysis of the economic potential of HotApps, which it claimed has “enhanced features” that will differentiate it from existing players.
 
To ensure proper treatment for public reporting purposes, prior to the completion of the transaction, FIE is expected to commission its own independent valuation of HotApps.
 
In May, SeD identified information technology – led by companies such as HotApps – and construction/ international property development as the two engines which will propel corporate recovery and growth.
 
“North America is a market which has not only embraced such technologies but has a pool of investors who are willing to invest in such applications,” said Chan Heng Fai, SeD’s chief executive officer and its single-largest shareholder.
 
Apart from its acquisition of HotApps, SeD recently entered into a memorandum of understanding with cloud-based communication solutions provider CloudTel Pte Ltd, which it said owns the world’s first 10in desktop interactive cross-platform smart terminal running on the Android operating system.
 
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