KMF, KMR to be merged and listed on Korean stock exchange

VNStockNews.com - On November 20, Mirae Joint Stock Co (HOSE listed KMR) in coordination with Ban Viet Securities JSC (VCSC) co-organised the merger plan with Mirae Fiber JSC (HNX listed KMF) as well as the listing plan on Korea Stock Exchange (Korean Securities Dealers Automated Quotation- Kosdaq).

Talking about the merger event, To Hai, general director of VCSC said that Vietnam has not had particular laws on merger and acquisition (M&A) but there are only two methods of merger and takeover, for example KMR and KMF. The merger will turn out a new entity and they will annul listing of initial two companies-which is a new thing in Vietnam. M&As will bring in five core effects: added value for shareholders, enhancing the competitive strength of being-merged corporates, expanding market share, reaching economy of scale, and new technology ownership.

KMR will buy back 100 percent of KMF through issuing over 14 million convertible bonds to KMF's shareholders as per 1:1.35 the ratio (each KMF shareholder will receive 1.35 shares of KMR) in late this December. The number of KMR on the market after the issue will be 27,304,189 shares.

After being merged, KMF will become the northern branch of KMR whereby KMR is expected to be one of Vietnam's leading producers of cotton.

In line with long term plan, Kim Chul Soo-finance director of KMR said that after going on Kosdaq, KMR will put the factory in Da Nang into operation by 2011 and establish the representative office in Korea. The goal of KMR is to directly produce polyester fibre to increase its competitive strength in prices and then earn huge profits.

Reportedly, EPS of KMR surged by 19.84 percent, KMF up 3.36 percent and the EPS increase of both companies is 12.01 percent.

To carry out the listing roadmap on Kosdaq, KMR hired the consultancy of Korea Investment and Securities Co (KIS).
According to a representative of KIS, IPO and listing in Korea are two parallel processes. Obtaining listing license means that IPO is approved. However, as for KMR, because the company is being listed on Hochiminh Stock Exchange (STC), so the listing on Korea market will be carried out under "foreign ownership certificate".

KMR expects to raise $8 million from Korea and list on Kosdaq in the end of 2010.