PETALING JAYA: Velocity Capital Partner Bhd
(Velocity) has fully exited its investment in MMAG Holdings Bhd, disposing of its entire 6.46% stake through open market transactions for a total cash consideration of RM9.43mil.
In a filing with Bursa Malaysia, Velocity said it sold 32.6 million MMAG shares on Jan 9 for RM2.12mil, followed by the disposal of the remaining 117.4 million shares on Jan 12 for RM7.31mil.
Following the transactions, Velocity ceased to be a substantial shareholder of MMAG.
The shares were sold at prices ranging from 6.224 sen to 6.5 sen per share based on prevailing market prices at the time.
Velocity, which is primarily involved in transportation, logistics and ceramics, originally invested RM60mil to acquire the 150 million shares last March.
Velocity said the disposal resulted in an estimated loss of RM324,024, after taking into account cumulative fair value losses previously recognised.
As at the latest practicable date, the carrying value of the investment stood at RM9.75mil.
Explaining the rationale for the disposal, Velocity said the investment was initially made to strengthen collaboration between its logistics arm, Line Haul Sdn Bhd, and MMAG’s indirect subsidiary Line Clear Express Sdn Bhd, focusing on hub-to-hub middle-mile logistics services.
However, Velocity said that “due to adverse market conditions and continued volatility in MMAG’s share price, the value of the group’s investment declined significantly”.
The group’s board said that maintaining the stake would expose Velocity to “further downside risk.”
“While the disposal resulted in a loss compared to the original cost of investment, the board is of the view that the disposal represents a prudent decision to manage investment exposure, preserve financial flexibility and limit further potential losses,” Velocity said.
Proceeds from the disposal will be used for working capital, future business expansion and potential acquisitions, although the detailed allocation has yet to be finalised.
Velocity added that it remains committed to its ongoing operational collaboration with MMAG, which it said continues to deliver synergies despite the exit from its equity stake.
