KUALA LUMPUR, Malaysia (July 2): By inking a memorandum of understanding (MOU) with several vendors for the acquisition of Singapore-based Tenda Construction Equipment Pte Ltd and Tenda Equipment & Services Pte Ltd, China Automobile Parts Holdings Bhd (CAP) is making another attempt to normalize its Practice Note 17 (PN17) condition. The company claimed in a filing with the market that it had signed an MOU with Lee Seng Guan, Tan Gim Yiam, Lee Hay Chiang, and Lee Peng Quan to negotiate a definitive share sale agreement for the acquisition of the two companies’ whole equity interest.
The target companies are in the business of providing construction and civil engineering machinery and equipment for repair and maintenance, as well as providing, renting, and selling the machinery and equipment.
According to CAP, the planned acquisition entails the formation of a new holding company (Newco) and the acquisition of target companies through the issue of Newco’s shares.
A proposed exchange of CAP shares for Newco shares, a proposed share placement by Newco, and a proposed transfer of listing status from CAP to Newco are all part of the exercise.
“The MOU establishes the parties’ understanding and intention in relation to the Proposed Regularisation Plan and allows them to discuss solely for at least six months. The planned acquisition is part of the company’s regularisation plan, which aims to resolve the company’s PN17 situation and keep its listing status on Bursa Securities’ Main Market “CAP said.
This is CAP’s third attempt to improve its financial situation, following a failed attempt to buy Local Assembly Sdn Bhd, a subcontractor assembler of electrical appliances and equipment and a plastic injection moulded components maker, in May this year.
China Automobile shares have been off the market since June 8, 2017, after the company failed to deliver its financial reports on schedule. The company has yet to release its 2017 and 2018 annual reports, after reporting a net loss of RM77.12 million in the financial year ended December 31, 2016.
It was demoted to PN17 status in January 2018 after its external auditor, Messrs PFK, issued an audit disclaimer of opinion on concealed substantial liabilities in the company’s audited financial accounts for FY15./n
