Goodway Integrated Industries Bhd group chief executive officer Tai Boon Wee.
KUALA LUMPUR: NSA Technology Sdn Bhd has decided not to seek an exemption from making a mandatory offer (MO) for shares in rubber products maker Goodway Integrated Industries Bhd (GIIB) under revisions made to its reverse takeover exercise, which also involve putting a higher price tag on the NSA unit to be injected into GIIB.
In a filing with Bursa Malaysia on Tuesday, GIIB said it and NSA had inked a supplemental agreement to amend and vary certain terms of the conditional share sale agreement signed in July, including the addition of a promissory note to the 1.8 billion new GIIB shares to be issued to NSA.
Under the earlier agreement, NSA would inject the entire equity interest in national security solutions provider S5 Systems Sdn Bhd -- then valued at RM900mil -- into loss-making GIIB for new GIIB shares at an issue price of 50 sen each. NSA will end up holding 94.22% equity interest in GIIB.
The decision to include a promissory note in favour of NSA under the supplemental agreement follows a re-audit exercise for the S5 Systems group, which saw the reversal of of RM144mil of S5 Systems’ revenue for the financial year ended (FYE) June 30, 2014. This was in respect of unearned income received for support and maintenance services for the project for provision of national security solution which has been subsequently recognised as deferred revenue.
GIIB said the amount was now recorded as “other payables and accruals” in the statement of financial position of S5 Systems as at June 30, 2014.
The deferred revenue is to be recognised progressively at the amount of RM16mil per year for nine years from the FYE June 30, 2014, onwards as services are performed by S5 Systems. As a result, NSA’s after-tax profit guarantee to GIIB has increased from RM55mil to RM71mil for the period from the completion date to Dec 31, 2017, and for calendar year 2018.
GIIB said the issuance of a promissory note to NSA Technology would be for an amount equivalent to the deferred revenue.
“Based on the amount of the deferred revenue as at June 30, 2016, of RM112mil, the illustrative vevised purchase consideration is RM1.012bil,” the company said.
Under the revised proposals, the maximum proposed placement by the vendor has risen from 440 million consideration shares to 542.75 million shares (including 102.75 million offer shares in the event of full acceptances by all the shareholders of GIIB under the proposed MO) to investors to be identified.
NSA Technology, which is wholly owned by Datuk Seri Johann Young’s investment vehicle Tenang Masyhur Sdn Bhd, intends to maintain GIIB’s listing status on the Main Market; hence it plans to comply with the minimum 25% public shareholding spread requirement.
The revised proposals are expected to be completed by the third quarter of 2017.
S5 Systems’ current income comes mainly from the immigration security projects in Malaysia and other security projects outside Malaysia, such as India, the Philippines and Vietnam.
Win a prize this Mother's Day by subscribing to our annual plan now! T&C applies.
