Kubera Cross-Border offloads stake in Synergies Casting

Kubera Cross-Border Fund announced on Friday that its subsidiary, Kubera Cross-Border Fund Mauritius, has entered into a binding agreement as of 8 August to dispose of its entire equity and debt interest in Synergies Casting.

The AIM-traded firm said a private buyer, Jamy, agreed to purchase the company's interest in Synergies Casting for a consideration - net of transaction costs - of $14.58m, in four tranches over 18 months.

It said there were incentives in place for a faster completion, and if the transaction was completed within 12 months, there was a provision for the aggregate consideration to be reduced by up to $1.82m.

“The estimated sale consideration based on USD 14.58 million is for the Company's interest only,” the board explained in its statement.

“The total sale consideration - including the 8.8% co-investment by the former investment manager - is $16m.”

That would be equivalent to 35.4% of the net asset value presented in the audited financial statements as at 31 December 2016, which were inclusive of the co-investment by the former investment manager.

As at 31 December 2016, the carrying value of the investment for the company was $13.96m, to reflect the time value of money, lack of liquidity and credit risks.

“Should the buyer default on any of the tranche payments, the company, through its subsidiary, will continue to hold its remaining pro rata equity and debt interests and various shareholder rights, and the buyer will be subject to a $0.91m penalty,” the board said.

Pursuant to the agreement, the first tranche had been divested and consideration of $2.55m had already been received.

In accordance with the company's investment policy, the board said it intended to distribute to shareholders all cash not required to meet operating costs, and will make further announcements on that in due course.