The Board of Directors of PESTECH wishes to inform that Astoria Solar Farm Sdn Bhd (“ASF”), a subsidiary of PESTECH, had on 15 January 2020, entered into a Share Sale and Purchase Agreement (“SSPA”) with Mr. Salah A. Essa (“SE”) and Mr. Sachithanathan Muniandy R Sambu (“SMRS”) where ASF agrees to acquire 4,700 shares or 94% of shares held by them in Green Sustainable Ventures (Cambodia) Co., Ltd. (“GSV”), representing 45% and 49% of the share capital held by SE and SMRS, respectively, at a purchase consideration of USD4,000,000 (United States Dollar : Four Million only) (“Purchase Price”) (“Proposed Acquisition”).

(ASF, GSV, SE and SMRS are collectively hereinafter referred to as the “Parties” or individually referred to as each “Party”)

(SE and SMRS are hereinafter referred to as “Vendors” or individually referred to as each “Vendor”)

1.   INFORMATION ON ASF, GSV, SE AND SRMS

1.1 ASF is a company incorporated in Malaysia and having its registered office at No. 26, Jalan Utarid U5/14, Seksyen U5, 40150 Shah Alam, Selangor Darul Ehsan. The issued and paid-up share capital of ASF is RM1 comprising one (1) ordinary share.  The principal activity of ASF is to carry on the business of provision of engineering, procurement and construction (“EPC”), commissioning and consultancy services for solar photovoltaic system and to operate solar power farm.   ASF is a wholly-owned subsidiary of PESTECH Power Sdn. Bhd., which in turn is wholly-owned by PESTECH.

1.2 GSV is a company validly existing under the laws of Cambodia having its registered office at No. B18, First Floor, St. Sopheak Mongkul, Koh Pich, Sangkat Tonle Bassac, Khan Chamkarmon, Phnom Penh, Kingdom of Cambodia. 

1.3 SE is the legal and beneficial owner of 2,550 shares, which is 51% of the total issued and outstanding share capital of GSV.

1.4 SMRS is the legal and beneficial owner of 2,450 shares which is 49% of the total issued and outstanding share capital of GSV.

2.  RATIONALE OF THE PROPOSED ACQUISITION

The Parties are desirous to embark on the Proposed Acquisition such that ASF has the super-majority rights over the development of a 20 years concession (with additional one (1) year of construction period) of not less than 20MW AC (24MW DC) large-scale solar farm project in Bavet City, Svay Rieng Province, Cambodia (hereinafter referred to as the "Project") via long-term Power Purchase Agreements ("PPA") with Electricité du Cambodge (“EDC”) under the Built Own and Operate (“BOO”) model with a power purchase price of USD0.076 per kWh. 

GSV is a local company in Cambodia strives to seek for renewable energy opportunities in Cambodia and it successfully procures the PPA from EDC, Implementation Agreement (“IA”) from the Ministry of Economy and Finance and Government Guarantee (“GG”) for the Project under the name of GSV. 

Upon the Proposed Acquisition of 94% in GSV, GSV shall be the developer and undertake the project management of all EPC functions.   ASF, being the super majority shareholder in GSV, may determine the appointment of EPC and operations and maintenance (“O&M”) company to undertake the EPC scope for the entire Project and O&M for the duration of the PPA.  

The Proposed Acquisitions is expected to contribute to the profitability of the Group throughout the duration of the PPA.  The acquisition of super majority stake in GSV is an affirmation of the Group’s commitment and confidence to the long term prospects of renewable energy business in Cambodia.

3.  SALIENT TERMS OF THE SSPA

The salient terms of the SSPA are as below:-

This SSPA comes into effect upon its execution, and the following salient conditions precedent (“CPs”), amongst others, shall be completed within three (3) months from the date of the SSPA (the “Completion Date”):

3.1 GSV to produce all PPA, IA, and GG executed in original hardcopy from all respective authorities;

3.2 The registration of the ASF as the legal and beneficial owner of 94% of the total issued shares of the Company with all relevant authorities, in particular, the Ministry of Commerce;

3.3 SE procured the official ownership of the land to be used as the project site pursuant to the Certificate of Title; and

3.4 The Long-Term Lease Agreement has been executed between GSV and SE, subject to the terms and conditions to be mutually agreed between the Parties.

4.  BASIS OF ARRIVING AT THE PURCHASE CONSIDERATION FOR THE PROPOSED ACQUISITION

The Purchase Consideration was arrived at based on negotiations between ASF and the Vendors on a willing buyer willing seller basis after taking into consideration the viability of the Project and earnings prospects of GSV.

5.  LIABILITIES TO BE ASSUMED

There are no liabilities (including contingent liabilities and guarantees) to be assumed by PESTECH arising from the Proposed Acquisition.

6.  RISK FACTORS

The Board of Directors of PESTECH is not aware of any risk factors arising from the Proposed Acquisition other than the normal business, market and global economic risks.

7.  SOURCE OF FUNDS

The Purchase Consideration will be funded through bank borrowings and internally generated funds.

8.  EFFECTS OF THE PROPOSED ACQUISITION

8.1 On Share Capital and Substantial Shareholders’ Shareholding

      The Proposed Acquisition will not have any effect on the share capital and substantial shareholders' shareholding of PESTECH.

8.2 On Earnings Per Share, Net Assets Per Share and Gearing

      The Proposed Acquisition is not expected to have any immediate material effect on the earnings per share, net assets per share and gearing of PESTECH for the financial year ending 30 June 2020. However, the Proposed Acquisition is expected to contribute positively to the future earnings of PESTECH Group.

9.  APPROVAL REQUIRED

The Proposed Acquisition does not require approval from the shareholders of PESTECH  or any relevant authorities.

10.  DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS

None of the directors or major shareholders of PESTECH or persons connected with them has any interest, direct or indirect, in the Proposed Acquisition.

11.  STATEMENT BY THE BOARD DIRECTORS

The Board of Directors of PESTECH is of the opinion that the Proposed Acquisition is in the best interests of PESTECH Group.

12.  ESTIMATED TIMEFRAME FOR COMPLETION OF THE PROPOSED ACQUISITION

Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed by second quarter of year 2020.

This announcement is dated 15 January 2020.