Formis buys 20.59% of Ho Hup from Extreme System

KUALA LUMPUR: Information technology services outfit Formis Resources Bhd’s unit yesterday unveiled its plans to diversify into construction and property development by taking up a substantial 20.59% stake in construction firm Ho Hup Construction Co Bhd.

In a filing with Bursa Malaysia, Formis said its wholly-owned unit Formis Holdings Bhd yesterday acquired the stake from Extreme System Sdn Bhd.

Formis purchased the 21 million shares for a total consideration of RM16.8 million in cash or 80 sen per share.

The purchase price is to be funded entirely by bank borrowings to be fully paid up by July 1, Formis added.

Extreme System is the investment vehicle of Datuk Vincent Lye, the former Ho Hup deputy chairman who was removed from the board last year in a boardroom tussle with the founding Low family.

After the divestment of the shares to Formis, Extreme System will hold about 7.36% equity interest in Ho Hup, which is primarily involved in civil engineering and construction.

Ho Hup’s other substantial shareholder is Low Chee and Sons Sdn Bhd which holds a 22.66% stake and is a vehicle of former Ho Hup managing director Datuk Low Tuck Choy, whose father founded Ho Hup in 1960.
Ho Hup's other substantial shareholder is Low Chee and Sons Sdn Bhd with a 22.66% stake.

Formis said it expects Ho Hup to derive a steady stream of attractive profit from the land development once the latter completes its restructuring and normalising operations.

“The directors [of Formis] believe that the acquisition of a strategic interest in Ho Hup presents a good opportunity to invest in a sizeable prime property development project,” Formis said.

Ho Hup’s crown jewel is its 60-acre parcel of land in Bukit Jalil which was the centerpiece of a lengthy courtroom battle and boardroom tussle.

The land was meant to be developed by a joint venture between Ho Hup’s 70%-owned subsidiary, Bukit Jalil Development Sdn Bhd, and a wholly-owned unit of Malton Bhd.

Earlier this month, the Kuala Lumpur High Court ruled in favour of Ho Hup, declaring the earlier joint-venture agreement null and void.

The resolution of the legal battle is seen as a key step to enable Ho Hup to proceed with its financial regularisation plan and move out of the PN17 category it has been in since July 2008.

Ho Hup shares yesterday closed 0.5 sen higher at 80.5 sen, marginally higher than Formis’ entry price of 80 sen per share.

The stock has been trading at around 80 sen over the past week, slightly lower than its one-year high of 86 sen.