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Falling Knife of the Week: OEL (Holdings) Limited

OEL (Holdings) Limited (Catalist: 584), formerly known as Oakwell Engineering Limited, fell 11% so far for the week. It closed at $0.112 on Thursday. The company is an investment holding company that provides of a wide range of engineering and procurement solutions to the energy-related industries.

Last week, on 16 Jan 2014, OEL announced that it will be acquiring two companies – Singapore Service Residence Pte Ltd (SSRPL) and Expats Residences Pte Ltd (ERPL) – for a total of around S$54 million. The two companies are indirect wholly owned Singapore subsidiaries of Heng Fai Enterprises Limited, which is listed in Hong Kong.

The acquisition will be funded via the company’s internal resources and issuance of convertible bonds.

One of the rationales for the latest move is to diversify into the property segment in Singapore. SRPL and ERPL own a total of 35 commercial, residential, and small-office-home office properties in North Bridge Road and Dakota Crescent. The total area of the units is 41,585 square feet. The properties have a carrying value of around S$72 million and outstanding bank loans of approximately S$19million, as of 30th September 2013.

OEL made losses of S$29 million in 2012.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.