Asia Knight to acquire plastics firm for RM88m as part of regularisation plan

by **Cals** Wed 06 Apr 2016, 01:33

Asia Knight to acquire plastics firm for RM88m as part of regularisation plan

By Supriya Surendran / theedgemarkets.com | April 5, 2016 : 10:00 PM MYT

KUALA LUMPUR (April 5): Plastic parts manufacturer Asia Knight Bhd is proposing to acquire Rapid Growth Technology Sdn Bhd, a fellow player in the plastics industry, for RM88 million, as part of its regularisation plan to exit Practice Note 17 (PN17) status.

Asia Knight said it is buying the 100% equity interest in Rapid Growth from Hor Lim Chee, Ng Choon Keat, Tan Song Chai, Lim Seat Hoe and Tan Ann Chee, and will pay RM58 million in cash, and RM30 million via the issuance of 300 million new shares.

The vendors have given their guarantee that Rapid Growth’s net profit will not be less than RM22 million for the financial years ending Dec 31, 2016 and 2017, it said in a filing with Bursa Malaysia today.

As both Asia Knight and Rapid Growth are in the plastics industry, the enlarged group will be able to provide a broader range of products and value-added services to better service the group’s customers, it added.

Aside from the acquisition, Asia Knight’s regularisation plan involves a reduction of its share premium and share capital. After their implementation, Asia Knight expects to return to the black in the first half of the financial year ending June 30, 2016 (1HFY16), when its accumulated net loss of RM54.55 million before the reduction exercise is turned around into a net profit of RM230,000.

The group is also proposing a seven-for-one rights issue, together with free detachable warrants.

Asia Knight’s substantial shareholders include Pahangply Holdings Bhd (28%) and See Leng Sai & Sons Realty Sdn Bhd (14.77%), both vehicles of Asia Knight’s managing director See Teck Wah.

The regularisation plan also includes a special issue of shares to investors to be identified later. The issue is aimed at raising funds for the acquisition of Rapid Growth and to comply with the 25% public shareholding spread requirement.

Asia Knight said the rights issue and special issue are expected to raise gross proceeds of RM40.69 million and RM20 million respectively. Of this, RM58 million will be used for the acquisition of Rapid Growth, and the remainder for working capital and expenses for the regularisation plan.

Asia Knight had in February, aborted its earlier plan to acquire construction outfit PA Builders Sdn Bhd, due to the unexpected slowdown in projects in the latter company.

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

Its shares did not trade today. Asia Knight last traded on March 17 at 23 sen, for a market capitalisation of RM13.37 million.