Wednesday, January 9, 2013

United Envirotech

United Envirotech (UEL) / WaterPlays: Announced that KKR is investing a further US$40m in it. KKR will subscribe to 98.536m of its shares at 50c apiece. This is an 8.5% premium over its Vwap for the last 30 trading days, at 46.1c/share and represent 11.04% of the enlarged issued share capital of UEL. UEL plans to use the proceeds to fund the acquisition of water-treatment plants, the upgrading of existing plants and the company's working capital. Separately, KKR had in Oct11 subscribed to a UEL issue of US$113.8m, which when converted, represented 38.40% of UEL's shares on a fully-diluted basis. Upon completion of the proposed subscription, KKR will have a direct interest of approximately 45.19% of all UEL shares on a fully-diluted basis. Separately, UEL intends to purchase a 13.2% stake in Memstar Tech for $35m from two major shareholders, which UEL intends to fund using internal funds or bank borrowings (and the issue of new shares). UEL believes the move will strengthen the strategic relationship between them, given that MTL is the key supplier of its membranes, and also leverage on MTL’s membrane technology. We note that given the resurgence in ‘WaterPlays’, we do not rule out interests to be reignited on similar peers, esp Sound Global, Hyflux and Draco etc.

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