Reverse takeover on the cards for Flonic?

by **Cals** Mon 19 Aug 2013, 05:34

Published: Saturday August 17, 2013 MYT 12:00:00 AM
Updated: Saturday August 17, 2013 MYT 12:55:34 PM
Reverse takeover on the cards for Flonic?
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TAN Siew Ching, who is the granddaughter of the the founder of Tan Chong Motors Holdings Bhd the late Tan Sri Tan Yuet Foh, has increased her stake in Flonic Hi-Tech Bhd after emerging as a substantial shareholder in the manufacturer of critical and precision cleaning systems on July 15.

She bought two million more shares at 15 sen each on Aug 6, increasing her stake to 9% or 31.5 million shares.

Apart from Tan, sources says former Perisai Petroleum Bhd major shareholder Nagendran Nadarajah had also been accumulating shares in the company.

StarBizWeek reported this on July 27.

According to one source, Nagendran has now accumulated above 5% in the company since then and his name should surface as a major shareholder of Flonic earliest by next week.

His intention, the sources say, is to later use his private firm – Gryphon Energy (M) Sdn Bhd – to conduct a reverse takeover exercise on Flonic.

It is unclear why he would want to do that on Flonic which counts multinationals as its clients.

Nagendran is known to be a savvy investor and an oil and gas heavyweight. He also reportedly holds a stake in South-East Asia’s first special purpose acquisition company – Hibiscus Petroleum Bhd. Flonic has no link to the oil and gas industry.

Gryphon is essentially involved in the licensing, research and development, marketing and leasing of mobile offshore production and storage unit (Mopsu) bareboats.

It also undertakes project management for Mopsu design, approvals, procurement, fabrication, installation, hook-up, commissioning, start-up, operations and maintenance.

Flonic shares have increased by 75% to a high of 21 sen since StarBiz first reported that Tan had emerged in the firm on July 24.

As a result, its market capitalisation has gone up from RM42mil to over RM70mil now.

Trading volume has also increased multi-fold in that period.

For this, the company received an unusual market query yesterday, with Bursa Malaysia asking it to explain the reason for the increased activity in the stock.

Flonic i reported net loss of RM611,000 for its first quarter ended April 30, against net loss of RM970,000 for the same period.

Revenue stood at RM3.4mil for the period against RM658,000 for the quarter a year ago.

As at April 30, the group did not have any capital commitments.

In January, Flonic proposed to buy a 30% stake in Jiwa Holdings Sdn Bhd, a group mainly involved in interior design and furnishing projects for RM3.75mil to be settled in cash.

In its announcement to Bursa, it said the future earnings from the Jiwa Group were supported by a profit guarantee as well as the positive prospects of its (Jiwa) business comprising project management, interior fit out, manufacturing and trading in wood furniture. “As such, the demand for its services and products is expected to grow steadily in line with the growth of the interior design industry in Malaysia.”

Flonic has an option to acquire an additional 21% equity interest in Jiwa Holdings for RM2.62mil.

Jiwa Holdings recently received letters of award totalling RM6.64mil for supply and interior decoration works to build one block of eight-storey service apartments containing 222 units at Lumut, Perak.