SMTrack sells stake to fund palm acid oil venture


KUCHING: SMTrack Bhd is selling its stake in a company to raise money for its new venture into the trading of palm acid oil.

The company has entered into a share sale agreement with One Trooper Systems Sdn Bhd for the disposal of 50% equity interest in My Record Sdn Bhd (formerly known as Sure-Reach Smartag Sdn Bhd) for RM5mil cash.

My Record is involved in providing radio frequency identification (RFID) software-based solutions in relation to the courier services and record management industry. Such solutions have yet to be commercialised.

SMTrack said the proposed disposal was to realise the value of its investments in My Record and reallocate resources to the group’s existing business activities.

The company said to commercial the RFID-based solutions would require additional investments which might not generate corresponding amount of revenue, thereby causing a strain in its financial position.

One Trooper Systems is principally engaged in systems integration and development of software especially for financial institutions.

“The proposed disposal is expected to result in a gain in disposal of RM4.99mil,” SMTrack said in a filing with Bursa Malaysia. SMTrack had late last year wrote off its investment of RM4.99mil in One Record, and the disposal would therefore enable the impairment to be reversed.

The company said RM3.5mil from the proceeds of the shares sale would be utilised for the purchase of palm acid oil and RM1.42mil as working capital for the company’s day-to-day operations.

In February this year, SMTrack announced it had ventured into the purchase of palm oil acid or palm oil sludge from mills in South-East Asia for resale to clients in the East Asia region following an agreement with Sino Renewable Energy Corp (SREC).

Under the deal, SREC – which owns a refinery in Sichuan Province, China – will collect the palm acid oil from SMTrack for processing into value-added products.

According to SMTrack, SREC owns a large network of sales support throughout China and also has a large number of customers in Europe, mainly in providing biodiesel, refined oils and related products.

“The palm oil acids shall be packaged in a flexible bag and will be tagged with the company’s RFID tagging traceability technology for identification and tracking purposes throughout its shipments,” added SMTrack.

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Business , East Malaysia , SMTrack , palm acid oil

   

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