PROPOSED ACQUISITION OF 450,000 ORDINARY SHARES OF SIW MANUFACTURING SDN. BHD. ("SMSB"), REPRESENTING 30% EQUITY INTERESTS IN SMSB BY SOLARVEST
| SOLARVEST HOLDINGS BERHAD |
| Type | Reply to Query |
| Reply to Bursa Malaysia's Query Letter - Reference ID | IQL-04122024-00001 |
| Subject | PROPOSED ACQUISITION OF 450,000 ORDINARY SHARES OF SIW MANUFACTURING SDN. BHD. ("SMSB"), REPRESENTING 30% EQUITY INTERESTS IN SMSB BY SOLARVEST |
| Description | SOLARVEST HOLDINGS BERHAD ("SOLARVEST" OR "THE COMPANY")
- Reply to Query Letter dated 5 December 2024 |
| Query Letter Contents | We refer to your Company’s announcement dated 3 December 2024, in respect of the aforesaid matter. 1) To clarify and elaborate on the basis for the purchase consideration of RM36,000,000.00, considering that the total Minimum PAT for the Guarantee Period is only RM30,000,000.00 and SOLARVEST is acquiring only 30% of the equity interest in SMSB. 2) To justify the basis for SOLARVEST to agree to the term stated in Section 2.2 (iii), where SOLARVEST is entitled to waive its rights set out under Section 2.2 (i) and (ii) of the Announcement and the Parties shall maintain the status quo and operate SMSB as going concern when the minimum PAT is not met. 3) To be specific on the approval and/or consent required from the relevant government authorities. 4) To state whether the Proposed Acquisition will result in diversification in operations carried out by SOLARVEST pursuant to Paragraph 10.13 of the Main Market Listing Requirements.
Please furnish Bursa Securities with your reply within one (1) market day from the date hereof.
Yours faithfully,
Listing, Regulation |
|
Reference is made to the Company’s announcement dated 3 December 2024 (“Announcement”) and query letter from Bursa Malaysia Securities Berhad dated 5 December 2024 (Reference No. IQL-04122024-00001) in relation to the above subject matter. Unless otherwise stated, the terms used throughout this announcement shall have the same meanings as defined in the Announcement.
The Board of Solarvest wishes to provide the following additional information to the public:-
1. The Proposed Acquisition has a cumulative Profit Guarantee of RM30million over 2 years (RM14million for FYE2024 and RM16million for FYE2025). The purchase consideration of RM36million for 30% equity stake is equivalent to 100% Equity Value of RM120million, this is equivalent to the following valuation multiples for the 2 years of Minimum PAT for the Guarantee Period:
The Company is positive on the acquisition being earnings accretive and at an undemanding valuation of 7.5x PE multiple, considering the high profitability growth to be guaranteed by the Management of SMSB.
2. If the Profit Guarantee is not met, Solarvest may decide to maintain the status quo by not exiting from SMSB through the put option if Solarvest is confident that SMSB would be profitable in coming years. If the Vendors are unable to pay the profit guarantee shortfall into SMSB, but they are able to provide alternative solutions to remedy the shortfall (e.g. paying 30% of shortfall directly to Solarvest as compensation, or to provide profit guarantee for FYE 2026 to make up for the shortfall), Solarvest may also consider to waive its right under Section 2.2(i) of the Announcement. The waiver of right under Section 2.2(iii) of the Announcement is to be exercised at Solarvest’s absolute discretion without derogating its right under Section 2.2 (i) and (ii) of the Announcement.
3. The Proposed Acquisition requires consent from the existing financiers of SMSB. SMSB is also required to notify the following government authorities for shareholding changes:
4. The Proposed Acquisition is not expected to result in diversification in operations carried out by Solarvest Group on the grounds that (with reference to Paragraph 10.13 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad):
(a) The Purchase Consideration of RM36 million is 15.6% of the audited consolidated net assets of Solarvest Group of RM230.8million, which is less than 25%; (b) Based on (i) the audited results of SMSB for the past 3 financial years as presented in Section 2.1 of the Announcement and (ii) the Minimum PAT of RM14 million and RM16 million for FYE2024 and FYE2025 respectively, shall not exceed 25% of Solarvest Group’s latest audited net profit of RM34.1million, on the basis that the results of SMSB will be accounted using equity method; and (c) There are no aggregate separate transactions and treatment of any such transactions as if they were one transaction where the terms of such transactions were agreed upon within the past 12 months and the total of any percentage ratio is 25% or more.
This announcement is dated 5 December 2024 |
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Announcement Info
| Company Name | SOLARVEST HOLDINGS BERHAD |
| Stock Name | SLVEST |
| Date Announced | 05 Dec 2024 |
| Category | General Announcement for PLC |
| Reference Number | GA1-05122024-00046 |