CON AERO TECH has announced the execution of a sale and purchase agreement with the buyer, MOBILE ACQUISITION CO, LLC, and the buyer's guarantor. Under this agreement, the company has conditionally agreed to divest its entire issued share capital in the target company, Motto Investment Limited, which is a wholly-owned subsidiary. The transaction will also involve the settlement of intercompany and shareholder loans. Upon completion of this deal, the company will no longer hold any equity interest in the target company or any other entities within its group.
The board has proposed that, subject to the fulfillment of applicable conditions—including approval from independent shareholders at an extraordinary general meeting for the sale, the associated special dividend, and the proposed delisting, as well as the completion of the transaction—the entire proceeds from the sale received at closing will be distributed to shareholders as a special dividend. Based on currently available information, assuming the transaction is completed, the estimated sale proceeds are anticipated to be between $500 million and $520 million.
Consequently, assuming completion and no change in the number of issued shares prior to the relevant record date, the estimated special dividend per share is projected to range from approximately $500 million (equivalent to about HK$3.902 billion or HK$0.419 per share) to approximately $520 million (equivalent to about HK$4.058 billion or HK$0.436 per share). Following approval by independent shareholders at the EGM, the board intends to declare this special dividend in Hong Kong dollars in accordance with regulatory rules, with distribution to eligible shareholders to occur as soon as practicable and no later than seven business days after completion.
After the distribution of this special dividend, the company plans to apply to the stock exchange for the voluntary withdrawal of its listing status. In addition to this special dividend, the board also proposes, subject to independent shareholder approval and completion of a separate property sale, to distribute the net proceeds from that property sale, after deducting stamp duty, as a cash dividend. The net proceeds from the property sale are HK$68.02 million, which would equate to approximately HK$0.0073 per share, assuming no change in the issued share count.
The board believes that following the divestment, the company will not possess sufficient operational scale or assets of adequate value to support the continued listing of its securities under the exchange's rules. Therefore, it is considered appropriate to proceed with a voluntary delisting after the sale is completed. Separately, the company has entered into a conditional agreement to sell a property for HK$69.5 million to an unrelated party, with the price determined through arm's length negotiations based on current market rates for comparable properties.
Given market volatility, an independent valuer will be appointed to assess the property's fair value. Should the valuation exceed the agreed sale price, the company will renegotiate the terms with the purchaser. This divestment represents a significant opportunity for the company to realize the value of its aviation piston engine business. Since its main board listing in 1991, the company has not conducted any equity fundraising activities due to low trading liquidity in its shares, and it does not foresee any material improvement in equity financing prospects in the near term.
Consequently, maintaining its listed status may not provide meaningful benefits for raising capital to support ongoing investments that could generate significant returns for the company and its shareholders. From a commercial perspective, the company expects to recognize an unaudited gain of approximately HK$1.4 billion from the sale upon completion. This will allow the company to unlock the investment value within its business and provide shareholders with an immediate opportunity to realize the value of their holdings.
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