LBS Bina said on Wednesday that its unit MITC Sdn Bhd had entered into a conditional share sale agreement with its 51.18% owned ML Global Bhd.
Under the agreement, MITC is selling a 75% stake in MITC Engineering Sdn Bhd for RM225mil. This would be in exchange for 200.82 million ML Global shares at 67 sen each and 135 million new irredeemable convertible preference shares of ML Global also at 67 sen each
Meanwhile, Lim Lit Chek will also sell his 25% stake in MITC Engineering for RM75mil. MITC will also place out up to 45 million shares to qualified third party investors.
LBS Bina said the disposal consideration was based on the implied price-to-earnings ratio (PER) of 14.36 times of the consolidated profit after tax (PAT) of MITC Engineering of RM20.89mil based on its trailing 12-month unaudited consolidated financial results for financial period ended June 30, 2016.
MITC Engineering's core activities are civil engineering, design and build and trading of building materials.
LBS Bina said the proposed disposal was part of its plan to streamline its construction businesses under ML Global group and its subsidiaries. This be through consolidating the resources of ML Gobal Group and MITC Engineering for greater operational and financial efficiency.
LBS Bina's combined construction businesses under ML Global would have better access to larger scale of business opportunities and provide the latter with the ability and platform to tender for larger scale external construction works which in turn is anticipated to improve its order book and earnings.
In a separate statement to Bursa Malaysia, ML Global said MITC Engineering has a construction order book of RM1.52bil with current contract value of RM1.06bil yet to be billed.
Currently, out of the confirmed construction order book of MITC Engineering, about RM570mil in contract value has been secured from external parties (being contracting parties other than companies related to MITC Engineering, in particular members of the LBS Bina Group.
ML Global said MITC Engineering had tendered for RM640mil of construction contracts.
ML Global said the proposed acquisition would see its order book increase from RM80mil to approximately RM1.60bil.
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