KUALA LUMPUR: China-based fabric maker Sinotop Holdings Bhd is planning to acquire the entire equity interest in a construction firm controlled by its executive director Datuk Justin Soo for RM165mil.
Soo owns 60% of Asianmax Corp Sdn Bhd.
Sinotop told the exchange today that it had entered into a binding term sheet with Soo to explore the possibility of buying his stake in Asianmax, as well as the entire equity interest in the company for a total of RM165mil.
Soo, 40, is an executive director at Sinotop since October last year. He had earlier acquired a 15% stake in Sinotop from managing director Pan Ding.
“The indicative purchase consideration is subject to further adjustments based on inter alia independent valuation to be carried out on the business of the target company, further negotiation and due diligence review to be completed prior to the signing of the definitive agreement,” Sinotop said.
The acquisition, Sinotop said will enable the company to expand its project management and infrastructure construction businesses.
It said that Soo has agreed to provide an aggregate profit guarantee of RM50mil for the financial year ending 2019, 2020 and 2021.
Sinotop said it proposed purchase will be satisfied in cash or shares, or in combination of both.
The company said it may issue new redeemable convertible preference shares (RCPS) at an issue price of 42 sen.
It is also considering a rights issue exercise on a basis of two new Sinotop shares for every one at an indicative issue price of 13 sen per rights share.
“The potential rights issue exercise would raise up to RM102.67mil,” it said.
Shares in Sinotop declined three sen to close at 43 sen today.