BETHESDA, MD – Alset Inc. (NASDAQ:AEI), a Texas-based company operating in the real estate sector, announced on Thursday that it has entered into a Stock Purchase Agreement to acquire 6,500,000 shares of HWH International Inc. (HWH), a company listed on Nasdaq. The transaction, which took place on Wednesday, involves Alset Inc. purchasing the shares from its majority-owned subsidiary, Alset International Limited, in exchange for a secured promissory note valued at $4,095,000.00.
The promissory note carries an annual interest rate of 5% and is set to mature on September 26, 2026. The note will be secured with collateral as per a Security Agreement between the two entities. This strategic move is subject to approval by Alset International Limited's shareholders and other customary closing conditions.
Alset Inc.’s Chairman and CEO, Chan Heng Fai, who also holds the same positions in Alset International Limited and serves as Chairman of HWH, is a central figure in this transaction. Other board members of Alset Inc. also hold positions in Alset International Limited and HWH, indicating a significant overlap in leadership across these related companies.
This deal follows on the heels of debt conversion agreements made on September 24, 2024, between HWH and its creditors, including Alset Inc. and Alset International Limited, which converted a total of $3,801,759.00 of HWH's debt into 6,034,537 new shares of HWH's common stock at a conversion price of $0.63 per share.
Alset Inc. believes that the conversion of HWH’s debt into equity and the subsequent sale of HWH shares from Alset International Limited to Alset Inc. align with the best interests of all involved parties, including HWH, Alset International Limited, and Alset Inc. itself.
InvestingPro Insights
Recent InvestingPro data provides additional context to Alset Inc.'s (AEI) strategic move to acquire shares of HWH International Inc. As of the latest quarter, AEI's market capitalization stands at $13.39 million, reflecting its relatively small size in the real estate sector. The company's Price to Book ratio of 0.13 suggests that the stock may be undervalued relative to its book value, which aligns with one of the InvestingPro Tips indicating that AEI is "Trading at a low Price / Book multiple."
However, investors should note that AEI is facing financial challenges. The company's revenue for the last twelve months as of Q2 2024 was $9.22 million, with a significant revenue decline of 57.47% over the same period. This is coupled with an operating income margin of -101.51%, indicating that the company is operating at a loss. These figures provide context to the InvestingPro Tip that AEI is "Quickly burning through cash" and "Not profitable over the last twelve months."
Despite these challenges, AEI holds more cash than debt on its balance sheet, which could provide some financial flexibility as it pursues strategic initiatives like the HWH share acquisition. Investors considering AEI should be aware that there are 15 additional InvestingPro Tips available, offering a more comprehensive analysis of the company's financial health and market position.
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