REI’s entire business is targeted to be relisted by year-end under cash company Tecnic Group Bhd. This follows the signing of a definitive agreement on Thursday between Tecnic, which has sought a new core business after selling off its plastic product and mould making business last year, and Wan Azmi family-controlled vehicle Rohas-Euco Holdings Sdn Bhd for a reverse takeover of Tecnic.
Under the proposed regularisation plan aimed at keeping Tecnic’s listing status, Rohas-Euco Holdings - owned 74.8% by the well-known corporate figure and his wife Puan Sri Nik Anida Nik Manshor - will emerge as Tecnic’s controlling shareholder with an 88.71% stake.
Tecnic told Bursa Malaysia on Friday that Rohas-Euco Holdings would secure that stake by getting 317.46 million new Tecnic shares, to be issued at 63 sen apiece, as payment for the sale of its entire equity interest in REI to Tecnic for a purchase consideration of RM200mil.
As Rohas-Euco Holdings will end up with 88.71% of Tecnic’s enlarged paid-up capital, it will make a mandatory general offer for the remaining shares at an offer price of 63 sen each in cash.
Along with the proposed acquisition of REI, Tecnic will declare a dividend or another form of cash distribution to its entitled shareholders other than Rohas-Euco Holdings. It will give away all of its cash reserves except for the cash sum equivalent to the company’s total paid-up share capital.
Tecnic expects to distribute about RM20mil. The entitlement date will be determined later, before Tecnic’s takeover of REI is completed.
REI is involved in the design, fabrication and erection of power transmission and telecommunications towers as well as steel structures for power substations.
In addition, the REI group provides project management and consultancy for civil and infrastructure works, and works as an engineering, procurement and construction (EPC) contractor for water and sewage treatment plants.
REI’s pre-tax profit was RM25.8mil for the financial year ended Dec 31, 2014 (FY14), an increase of 58.3% from RM16.3mil in the previous year, while revenue grew 2% to RM114.9mil.
According to Tecnic, the audit of the combined financial statements of the REI group is currently in progress and will be made available at a later date.
As at Dec 31, 2015, the REI group has an order book of RM166.3mil, mainly for its power transmission and telecommunications towers
Tecnic’s proposed regularisation plan requires various approvals, including the approval of its shareholders at an EGM scheduled to be convened in the third quarter of this year.
On risks related to the REI group’s operations, the company noted that for FY14, “a large proportion” of the group’s revenue came from power transmission towers in Peninsular Malaysia and Sarawak.
“As such, the REI group is dependent on the performance and development of the power industry in Malaysia including Tenaga Nasional Bhd and Sarawak Energy Bhd which are solely responsible for transmission of power in Peninsular Malaysia and Sarawak respectively,” it said.
Barring unforeseen circumstances, Tecnic expects the proposed regularisation plan to be completed by the fourth quarter of 2016.
Tecnic shares were last traded on Bursa Malaysia at RM1.45 prior to the trading suspension starting late on Thursday and continuing throughout Friday.
Did you find this article insightful?