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The only caveat is that, as part of the deal, Elixir II will require financial assistance, and this will come from the shares that Willowglen is getting in Elixir II, which will be pledged to a bank as a share charge, as will the shares of Elixir I.
This assistance will help Elixir II borrow S$35mil to help pay for the transaction. Shareholders will need to scrutinise and weigh whether this deal is good for them, as this share charge will remain in effect until Elixir II has fully settled the banking facility, after which these shares will be released to Willowglen free of encumbrances.
But what happens till then? What benefits can Willowglen reap from this deal?
This structure isn't a weakness, it's a smart, capital-efficient move. The share charge is a normal way to finance things, and it doesn't take away Willowglen's profits from Elixir II. Instead of worrying about temporary issues, shareholders should look at whether the asset itself makes more money than it costs to finance. If it does, this deal boosts long-term value without diluting shares or draining cash.
