KUALA LUMPUR: Halex Holdings Bhd’s proposed acquisition of a majority stake in Kensington Development Sdn Bhd (KDSB) was terminated due to its failure to get the required approval from its shareholders for the transaction and the diversification into property development.
Based on Halex’s announcements to Bursa Malaysia, no EGM had been convened to seek their approval since the agreement was signed more than a year ago (with three deadline extensions to fulfill the conditions precedent).
In the filing with the bourse on Friday, Halex said the shareholders’ approval, being one of the conditions precedent of the share sale agreement (SAA), had not been procured within the agreed timeframe.
“Pursuant thereto, the parties to the SAA, namely Halex Realty and Bestempire (the vendor), have mutually agreed to terminate the SAA,” it said.
Halex’s unit Halex Realty Sdn Bhd inked the agreement to acquire the remaining 75% equity interest in KDSB for RM21mil (plus the settlement of a shareholder’s loan of RM3.69mil extended by Bestempire to KDSB) on March 20 last year.
Initially, the acquisition was expected to be completed by the third quarter of 2015.
Halex requested for a five-month extension to Dec 19, 2015, to fulfill the conditions precedent and later for another four-month extension to April 19, 2016. It subsequently asked Bestempire for a third postponement to Sept 19.
Loss-making Halex had in its announcement to the exchange in Marxch last year said KDSB’s development project in Kota Kinabalu would give a gross development profit of RM264.7mil over its estimated six-year development period starting from the first quarter of 2015.
“The proposed diversification is intended to be part of a long-term plan to move the group forward by expanding the group’s income stream and further strengthening the group’s financial position,” the company added.
In the newest filing, Halex said it also decided not to proceed with a proposed two-call rights issue with free detachable warrants that was intended to raise up to RM40mil, of which RM17.17mil was earmarked for partial payment of the proposed acquisition of KDSB.
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