• RM576 Save up to RM288 with the Yearly Premium Plan (Limited Time Only)
  • RM480 Save up to RM240 with the Yearly Advanced Plan (Limited Time Only)
Subscribe Now
premium Subscription Plan
add free StockBiz
YouTube MS Production

Last Price Change Volume
KLSE Market Watch
Open: Day Range: Prev Close:


UNITRADE INDUSTRIES BERHAD ("UIB" OR "THE COMPANY") - PROPOSED ACQUISITION BY UIB OF 51.0% EQUITY INTEREST IN INTERGREEN METALS SDN BHD ("IMSB") FOR A TOTAL CASH CONSIDERATION OF RM66.3 MILLION ("PROPOSED ACQUISITION")

UNITRADE INDUSTRIES BERHAD

Type Reply to Query
Reply to Bursa Malaysia's Query Letter - Reference ID IQL-13122023-00001
Subject UNITRADE INDUSTRIES BERHAD ("UIB" OR "THE COMPANY") - PROPOSED ACQUISITION BY UIB OF 51.0% EQUITY INTEREST IN INTERGREEN METALS SDN BHD ("IMSB") FOR A TOTAL CASH CONSIDERATION OF RM66.3 MILLION ("PROPOSED ACQUISITION")
Description
Unitrade Industries Berhad ("UIB" or "the Company")
- Proposed Acquisition by UIB of 51.0% Equity Interest in Intergreen Metals Sdn Bhd ("IMSB") for a total cash consideration of RM66.3 million ("Proposed Acquisition")
Query Letter Contents

We refer to your Company’s announcement dated 12 December 2023, in respect of the aforesaid matter.
In this connection, kindly furnish Bursa Securities with the following additional information for public release:-

1) The net profits and net assets of IMSB based on its latest audited financial statements.
2) The section 2.2 contradicts with the section 2.3(iii), to confirm whether “Pong Wing Seng” is a current director of IMSB.
3) The names of the “identified companies” identified as “Target Group”, and how are they related to IMSB.
4) The details of “Guaranteed Net Profits”; and a statement as to whether the profit guarantee provided is realistic, taking into consideration the historical performance and future prospects of IMSB; and details of UIB’s right of recourse in the event the profit guarantee is not met.
5) Details of how the RM 22,500,000 will be dealt with in accordance with the terms and conditions of the “Profit Guarantee”.

6) The details of Lot 14985, Jalan Kota Raja /KS07, Jalan Kebun Nenas, 41200 Klang, Selangor and Lot 6982, Jalan Seelong Jaya 5, 81400, Kg. Seelong Jaya, Johor, including a brief description (e.g. whether land or building, approximate area, etc.), the existing and proposed use.

7) In respect of the CCC Deadline and KM Deadline, to state what will happen in the event the Vendors are able to obtain the approvals by 31/8/2024; and in the event the Vendors are unable to obtain the approvals by 31/8/2024.

8) The prospect of IMSB.

Please furnish Bursa Securities with your reply within one (1) market day from the date hereof.

 

Yours faithfully,
Listing Division, Regulation
 

Cc : Market Surveillance Dept. , Securities Commission (via fax)

Unless stated otherwise, the terms used herein shall carry the same meaning as those defined in the earlier announcements dated 31 July 2023 and 12 December 2023.

 

Further to Unitrade Industries Berhad’s (“UIB” or the “Company”) announcement dated 12 December 2023 and Bursa Malaysia Securities Berhad’s (“Bursa Securities”) query letter reference number IQL-13122023-00001 dated 13 December 2023 (“Bursa query”). The Company wishes to announce the following additional information as required by Bursa Securities to the Bursa query:-

 

1. The net profits and net assets of IMSB based on its latest audited financial statements.

 

Based on the audited financial statement for the year ended 31 December 2022, the net profit of IMSB is RM3.23 million, and the net assets is RM21.43 million.

 

2. The section 2.2 contradicts with the section 2.3(iii), to confirm whether “Pong Wing Seng” is a current director of IMSB.

 

Pong Wing Seng has been appointed by IMSB as Executive Director since 2010 but does not hold a directorship position in IMSB within the definition of the Companies Act 2016.

 

3. The names of the “identified companies” identified as “Target Group”, and how are they related to IMSB.

 

The identified companies are namely, Intergreen Metals (Balakong) Sdn Bhd and Makna Mentarijaya Sdn Bhd. IMSB holds 90.0% interest in Intergreen Metals (Balakong) Sdn Bhd and 50.0% interest in Makna Mentarijaya Sdn Bhd respectively.

 

4. The details of “Guaranteed Net Profits”; and a statement as to whether the profit guarantee provided is realistic, taking into consideration the historical performance and future prospects of IMSB; and details of UIB’s right of recourse in the event the profit guarantee is not met.

 

The Guaranteed Net Profits means the target profit after tax (“PAT”) to be achieved by the Target Group (excluding non-controlling interest and if required to exclude other gain/loss arising from disposal of properties and also other comprehensive income pursuant to the Malaysian Financial Reporting Standards 116, paragraph 39) based on the Group’s consolidated audited financial statements (“Audited Accounts”) for the respective financial years/period as follows: -

 

i.) PAT of RM10,000,000 for the financial period commencing from 1 January 2023 to 31 March 2024 (“FPE 31 March 2024”);

 

ii.) PAT of RM15,000,000 for the financial year commencing from 1 April 2024 to 31 March 2025 (“FYE 31 March 2025”);

 

iii.) PAT of RM20,000,000 for the financial year commencing from 1 April 2025 to 31 March 2026 (“FYE 31 March 2026”).


FPE 31 March 2024, FYE 31 March 2025 and FYE 31 March 2026 shall each be referred to as a “Relevant Financial Period”.

 

We believe that the profit guarantee is realistic, as the latest eleven months of unaudited profit after tax have reached RM7.48 million. We are optimistic that the Target Group can attain the targets.

 

In the event that the audited PAT for any of the Relevant Financial Period shall fall short of the Guaranteed Net Profits for that Relevant Financial Period, the Parties hereby agree that an amount equivalent to such shortfall (“Clawback Amount”) shall be utilised from the First Retention Sum to pay for such shortfall to the Company and the Vendors shall authorise the Company’s solicitors to release from the First Retention Sum the Clawback Amount to the Company. The Purchase Price shall also be reduced accordingly by an amount equivalent to such Clawback Amount.

 

In the event the Target Group fails to achieve the Guaranteed Net Profits in respect of any Relevant Period and that the First Retention Sum is insufficient to cover the shortfall, the Guarantors shall compensate the Company by paying an amount in cash equivalent to the difference between the First Retention Sum and the actual Guaranteed Net Profits achieved in respect of the Relevant Period as compensation for the non-fulfilment of the Guaranteed Net Profits.

 

5. Details of how the RM 22,500,000 will be dealt with in accordance with the terms and conditions of the “Profit Guarantee”.

 

Upon the Target Group achieves the Guaranteed Net Profits for the Relevant Financial Period, the First Retention Sum shall be released by the Company’s Solicitors to the Vendors on a proportionate basis within three (3) days from the date of receipt by the Company of the signed copy of the Audited Accounts for the Relevant Financial Period as follows:

 

Relevant Financial Period

Guaranteed Net Profits

(RM)

Amount payable to Vendors

(RM)

FPE 1 January 2023 to

31 March 2024

 

10,000,000

5,000,000

FYE 31 March 2025

15,000,000

7,500,000

FYE 31 March 2026

20,000,000

10,000,000

Total

45,000,000

22,500,000

 

In the event that the audited PAT for any of the Relevant Financial Period fall short of the Guaranteed Net Profits for that Relevant Financial Period, the First Retention Sum shall be dealt with in the manner as set out in Query 4 above.

 

6. The details of Lot 14985, Jalan Kota Raja /KS07, Jalan Kebun Nenas, 41200 Klang, Selangor and Lot 6982, Jalan Seelong Jaya 5, 81400, Kg. Seelong Jaya, Johor, including a brief description (e.g. whether land or building, approximate area, etc.), the existing and proposed use.

 

Details of Lot 14985, Jalan Kota Raja /KS07, Jalan Kebun Nenas, 41200 Klang, Selangor:

 

Title particulars

Pajakan Mukim 1585, Lot 14985, Mukim Klang, Daerah Klang, Negeri Selangor

Description and existing use

Yard for metal recycling

Land area

8,691 square metre

 

Tenure

Leasehold of 99 years expiring 18 July 2075

 

 

Details of Lot 6982, Jalan Seelong Jaya 5, 81400, Kg. Seelong Jaya, Johor:

 

Title particulars

Geran Mukim 1121, Lot 6982, Mukim Tebrau, Daerah Johor Bahru, Negeri Johor

Description and existing use

Yard for metal recycling

Land area

11,460 square metre

 

Tenure

Freehold

 

 

7. In respect of the CCC Deadline and KM Deadline, to state what will happen in the event the Vendors are able to obtain the approvals by 31/8/2024; and in the event the Vendors are unable to obtain the approvals by 31/8/2024.

 

In the event the Vendors obtain both or any of the approvals by 31/8/2024, the Second Retention Sum and/or the Third Retention Sum (as the case may be) shall be released by the Company’s solicitors to the Vendors upon obtaining the relevant approvals.

 

On the contrary, in the event the Vendors are unable to obtain the approvals by the CCC Deadline and the KM Deadline, the Company’s solicitors shall be authorised to:

 

i.) release the Second Retention Sum to the Company within seven (7) Business Days from the CCC Deadline; and

ii.) release the Third Retention Sum to the Company within seven (7) Business Days from the KM Deadline.

 

In that regard, the Company shall also at their discretion be entitled to instruct IMSB to:

 

i.) build and construct a similar structure with Certificate of Completion and Compliance in respect of Lot 14985, Jalan Kota Raja /KS07, Jalan Kebun Nenas, 41200 Klang, Selangor; and/ or

ii.) relocate its operations at Lot 6982, Jalan Seelong Jaya 5, 81400, Kg. Seelong Jaya, Johor to another premise that can comply with the relevant laws and regulations.

 

8. The prospect of IMSB.

 

IMSB holds a 20-year track record in metal waste recycling industry since its establishment in 2003, showcasing its expertise and reliability in the industry. Demonstrating consistent financial health, IMSB has maintained healthy revenue and profit over the past three years.

 

UIB Group's support will strengthen IMSB's position, driving growth and enhancing its market presence in the metal waste recycling industry. By combining forces under an enlarged entity, it allows IMSB to facilitate a streamlined supply of metal waste to steel manufacturers while enhancing its operational capacity for simultaneous projects. This collaboration brings synergistic values, with UIB Group procuring products from steel manufacturers while IMSB provides raw metal waste materials to these mills.

 

In line with Malaysia’s sustainability agenda, IMSB is well-positioned in the circular economy market. Its involvement in metal recycling promotes responsible consumption through the optimisation of material usage, where it collects and processes metal waste to be recycled into input feedstock for steel manufacturers. This commitment not only aligns with sustainability trends but also underscores the shared dedication of UIB Group and IMSB towards eco-friendly practices.

 

This announcement is dated 15 December 2023.





Announcement Info

Company Name UNITRADE INDUSTRIES BERHAD
Stock Name UNITRAD
Date Announced 15 Dec 2023
Category General Announcement for PLC
Reference Number GA1-15122023-00040



Close
New Feature
MS Academy
AI StockMaster. Beat The Market! Checking MS Signal
DETECT REAL-TIME STOCK MOVEMENT
X
(InvestorPro Plan Only)
Complimentary access on Premium Plan*
What is AI StockMaster?
Window Alert On-Screen Alert X
X