KUALA LUMPUR: Advancecon Holdings Bhd is acquiring 51% majority stake in quarry operator Spring Energy Resources Bhd for RM30.4mil to expand the potential reach of its earthworks and civil engineering services.
The civil engineering services specialist said the stake would be acquired from Spring Energy’ investment holding company, Fook Hua Holdings Sdn Bhd.
“The purchase consideration would be satisfied by a cash consideration of RM15.2mil, combined with the issuance of 33 million new Advancecon shares to Fook Hua at an issue price of 46 sen per share, ” it said in a statement.
It said this would increase Advancecon’s number of issued ordinary shares to 448.8 million shares from 415.8 million shares currently and upon completion of the acquisition, Fook Hua would hold 7.4% of Advancecon’s expanded shareholding base.
“The cash consideration portion would be financed via internally generated funds and bank borrowings, ” it said.
Advancecon said the acquisition would also ensure a sufficient supply of quarry products and machinery to its current and future projects.
It will also expand the potential reach of its earthworks and civil engineering services segment by leveraging Spring Energy’ distribution network in Negri Sembilan, Selangor, Pahang and Perak.
“Integrating and streamlining the quarry operations reduces overall operational costs.
“This addition also sharpens our competitive edge by expanding our assets and human capital resources, which would position us more favourably when tendering for large-scale projects and increasing our competitiveness, ” group chief executive officer Datuk Phum Ang Kia said.
He said Spring Energy would provide a total profit after tax guarantee of RM12mil over the 24-month financial period across financial years ending Dec 31, 2022 and 2023, with RM6.1mil per year attributable to Advancecon based on the equity interest to be acquired.
He added that the proposed acquisition is expected to be completed by the third quarter of the calendar year 2021, subject to Bursa Securities’ approval for the listing and quotation of the new shares to be issued to Fook Hua as well as shareholders’ approval at an upcoming EGM. — Bernama