PETALING JAYA: Sungei Bagan Rubber Co
(Malaya) Bhd has proposed to take over all assets and liabilities of Kuchai Development Bhd (KDB) for RM275.47mil.
This related-party transaction comprises, among others, the acquisition of a refurbished two-storey corner pre-war shophouse on Emerald Hill Road, Singapore, and 8.23 acres of agricultural land in Hulu Langat, Selangor.
The shophouse is currently tenanted for a three-year term until end-2025 at a monthly rental rate of S$26,000 per month. Sungei Bagan said the agricultural land, which was rented out in 2023 for RM200 a month, carries “residential potential”.
In addition, Sungei Bagan plans to take over KDB’s shares in Great Eastern Holdings Ltd, totalling slightly over three million ordinary shares, filings with Bursa Malaysia last Friday by the respective companies revealed.
Sungei Bagan will also acquire KDB’s investments in Singapore dollar-denominated corporate bonds and redeemable preference shares in CAM GTi VCC, a variable capital company.
Along with the assets, Sungei Bagan will take over KDB’s liabilities of RM516,000.
KDB and Sungei Bagan are controlled by a common major shareholder Kluang Rubber Co (Malaya) Bhd.
On Dec 29, 2023, Sungei Bagan entered into a master sale and purchase agreement with KDB to kickstart the acquisition process.
The acquisition cost of RM275.47mil will be satisfied entirely via the issuance of 27.52 million new Sungei Bagan shares at an issue price of RM10.01 per share.
KDB said it intends to distribute all Sungei Bagan shares from the proposed disposal to the entitled shareholders by way of a proposed capital reduction and repayment and proposed dividend-in-specie.
KDB told the stock exchange the proposed disposal allows KDB and Sungei Bagan to consolidate, synergise and merge their investments into Sungei Bagan.
“The proposed disposal represents an opportunity with a ready buyer to purchase the assets and liabilities and provides a timely opportunity for KDB to dispose of the assets and liabilities in one single transaction at the adjusted unaudited net asset value of KDB which is higher than the historical share price of KDB shares.”
KDB also noted the proposed distribution of Sungei Bagan shares provides the entitled shareholders with an opportunity to participate in the prospects and future growth of the enlarged Sungei Bagan which will own the assets and liabilities in KDB.
Sungei Bagan will also continue to own its existing businesses, namely the production and sale of fresh oil palm fruit bunches as well as long-term portfolio investment in securities, while its wholly owned subsidiaries are involved in investment holding.
Meanwhile, Sungei Bagan stated KDB and its persons-acting-in-concert would be exempted from the obligation to undertake a mandatory general offer of Sungei Bagan shares that they do not own.
It added that KDB does not intend to undertake such an offer.
“Barring any unforeseen circumstances and subject to all requisite approvals or consents being obtained, the proposals are expected to be completed by the third quarter of 2024,” stated Sungei Bagan in its filing.
