SINGAPORE: Jason Marine Group Limited has exercised the Put Option to sell its entire eMarine Global (eMarine Investment) for KRW759 per share plus interest accrued on the aggregate consideration at a rate of 5.38% per annum for the period from 28 October 2011 to the date of exercise of the Put Option, in accordance with the terms of the Put Option.
eMarine Global Inc. on 9 October 2020 released an announcement on the OTC Market in the United States of America stating that its subsidiary, e-Marine Co., Ltd, was declared bankrupt by the Seoul Bankruptcy Court.
eMarine Global and eMarine Co were principally engaged in the provision of information and communications technology for the maritime industry.
Jason Marine Group, through Jason Venture Pte Ltd (a wholly owned subsidiary of the Company), holds 1,363,953 shares representing approximately 6% of the issued share capital of eMarine Global.
The Group also holds a put option to sell its entire eMarine Investment to Mr Ung Gyu Kim (Counterparty).
The Group’s initial cost of investment in eMarine Global was approximately S$1.23 million. Based on the audited consolidated financial statements of the Group for the financial year ended 31 March 2020 (FY2020), the fair value of the eMarine Investment amounted to S$487,000 and the fair value of the Put Option amounted to S$1.392 million as at 31 March 20202.
The Group expects to recognise a fair value loss on the eMarine Investment in its consolidated statement of comprehensive income for the current financial year ending 31 March 2021 (FY2021) based on the market price of eMarine Global on the OTC Market (which has decreased significantly since 31 March 2020).
Based on the last traded market price of eMarine Global on the OTC Market of US$0.05 per share on 9 October 2020, the implied market value of the eMarine Investment would amount to approximately S$92,000 and such fair value loss would have been approximately S$395,000.
In the event that the Disposal is successfully completed and to the extent that the Group is able to collect the full amount of the Consideration from the Counterparty, the Group will recognise an estimated disposal gain of approximately S$0.3 million in its profit and loss account for FY2021.
The consideration for the Disposal is KRW 1.53 billion (approximately S$1.81 million) in cash, after taking into consideration the interest accrued from 28 October 2011 to 13 October 2020 (being the date of exercise of the Put Option) at a rate of 5.38% per annum.
The Counterparty is legally obliged to make payment for the eMarine Investment within one month of receipt of the notice to exercise the Put Option.
The Board has evaluated various options to attempt to recover the Group’s investment in eMarine Global. As at the date of this announcement, the exercise of the Put Option appears to be the only feasible course of action. Accordingly, the Board believes that the exercise of the Put Option is in the best interest of the Company.
The Board would like to caution the Company’s shareholders that there is no assurance that the Group will be able to recover any amount of its eMarine Investment from the exercise of the Put Option. Shareholders should note that the Group had previously exercised the Put Option on 7 November 2018 and subsequently received written responses from the Counterparty which indicated that the Counterparty was then unable to fulfil his obligation to purchase the eMarine Investment. While the Company will use its best endeavours to recover the eMarine Investment, the Counterparty may not be able to perform its financial obligations under the Put Option and the Group may not be successful in the Disposal.
In the event that the Disposal is successfully completed and to the extent that the Group is able to collect the full amount of the Consideration from the Counterparty, the Group intends to utilise such proceeds from the Disposal for working capital and in such event, the Group will record a gain of approximately S$0.3 million in the profit and loss account for FY2021 arising from such Disposal.