KUALA LUMPUR: Quarry company SCH Group Bhd
is venturing into the equipment rental business with the proposed purchase of TK Tent & Air-Conditioning Rental Sdn Bhd (TK Tent) for RM50mil.
It said on Friday it had signed a share sale agreement with Hextar Holdings Sdn Bhd to acquire the entire stake in TK Tent.
As part of the purchase, Hextar Holdings has guaranteed that TK Tent shall achieve an aggregate profit after taxation (PAT) of at least RM15.50mil for the FY ending June 30, 2018 to FYE 30 June 2020.
SCH's core business is distributing and supplying quarry industrial products, quarry machinery, quarry equipment and reconditioned quarry machinery to the quarry industry in Malaysia and South East Asia
As for TK Tent, it provides event related equipment rental for and trading equipment such as temperature control systems, which includes portable air conditioner, chillers, air handling unit, fabric ducting and ventilation systems; generator sets, cables, switch board, diesel pump and skid tank.
“The SCH group proposes to diversify into the event equipment supply business segment pursuant to the proposed acquisition in order to diversify its earnings base and enhance its revenue and profitability. By diversifying into new business segment, the SCH Group is able to mitigate its dependence on its existing business portfolio and activities,” it said.
SCH expects the proposed acquisition to contribute positively to the overall financial performance and future profitability of the enlarged group.
SCH said since Hextar Holdings will be providing the profit guarantee, SCH plans to offer up to 60 million new shares to the latter or its related parties.
“The board is of the view that the participation of Hextar Holdings as a strategic investor will align the interest of Hextar Holdings to be mutually beneficial to the SCH Group,” it said.
SCH said the original date and cost of investments in TK Tent by Hextar Holdings was Aug 18, 2016 and RM40mil.
“The outlook of TK Tent is underpinned by the growth in event equipment supply industry, the availability of working capital and the strength of the experienced management team of TK Tent.
“Moving forward, TK Tent plans to further grow its business operations and prospects in the event equipment supply market,” it said.
Among TK Tent's plans are to expand its range of product offerings in its temperature control systems and energy products/equipment to include heavy duty equipment such as silent generator sets and air compressors.
TK Tent aims to expand its existing customer base and sales network as well as to increase its market share locally and internationally through various marketing efforts.
It plans to set up a new marketing team to focus on expansion and business development in the new international market, particularly in Indonesia, Singapore and Thailand.