PN17 company Asia Knight calls off construction venture

by **Cals** Wed 17 Feb 2016, 01:29

PN17 company Asia Knight calls off construction venture

By Yimie Yong / theedgemarkets.com | February 16, 2016 : 11:54 PM MYT

KUALA LUMPUR (Feb 16): Plastic parts manufacturer Asia Knight Bhd has called off its proposed venture into construction as part of a regularisation plan to exit Practice Note 17 (PN17) status.

In a filing with Bursa Malaysia, the company said it has agreed with the vendors of the construction firm to revoke the share sale agreement (SSA) they previously entered into.

Under the SSA signed in October 2015, Asia Knight was to acquire PA Builders Sdn Bhd for RM75 million, to be satisfied via a cash payment of RM5 million and the issuance of 350 million new Asia Knight shares at 20 sen a share.

In return, the vendors agreed to warrant Asia Knight that the net profit of PA group for the financial years ending July 31, 2016 and 2017, shall not be less than RM8 million a year.

The proposed acquisition was to allow Asia Knight to venture into the construction business and help improve its financial performance, as well as to enhance its shareholder value.

Asia Knight said the proposed acquisition was discontinued, mainly due to uncertain economic conditions.

“With the weakening of the ringgit and the uncertainties of the Malaysian economy, PA Builders is experiencing unexpected slowdown in getting feedbacks for the projects that they have tendered.

“PA Builders also faces slower collection from its customers and increased operating costs,” it said.

Asia Knight said it would seek from Bursa Malaysia, an extension of time to look for a suitable asset and to submit a revised regularisation plan.

Asia Knight fell into PN17 status in October 2014, following a disclaimer of opinion issued on its financial statements ended June 30, 2014.

Shares of Asia Knight were not traded today. According to its last closing price of 24 sen on Feb 12, it had a market capitalisation of RM13.95 million.

The share price has been on a downward trend since Jan 26.