RESTAURANT operator Thai Village Holdings has entered into a proposed $296 million reverse takeover (RTO) deal that could make it a Chinese plastic stationery supplier.

Thai Village will issue to China Stationery about 1.48 billion Thai Village shares at 20 cents each - a 29 per cent premium to yesterday's closing price of 15.5 cents.

In return, China Stationery will inject two subsidiaries - Sunwealth Group and Campus Developments - into Thai Village. Both are in the plastic stationery business.

China Stationery will hold 87.7 per cent of Thai Village if the deal goes through.

A waiver will be sought from the Securities Industry Council so China Stationery does not have to make a mandatory offer for the remaining Thai Village shares. A share placement will also be carried out to comply with Singapore Exchange listing rules. The deal is subject to other conditions, including shareholder approval and the appointment of an independent financial adviser to advise the board.

Related article: Click here for Thai Village announcement

In its most recent financial year to Dec 31, the target group reported revenue of 516.2 million yuan, a net profit of 215.3 million yuan and net tangible assets of 262.3 million yuan.

Asked about the reason for the proposed deal, Thai Village said the operating environment for restaurant business is challenging, in contrast to the bigger potential in China's recyclable plastic stationery market.

China Stationery has been trying for a straightforward listing in Singapore. It lodged a prospectus with the Monetary Authority of Singapore in early March but is said to have got a 'poor response' at roadshows, so the prospectus was not registered.

Thai Village said it has appointed OCBC Bank its financial adviser and KhattarWong as legal adviser on the proposed deal.

It also disclosed that its chairman and managing director Lee Tong Soon is an independent director of China Stationery.