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Sunzen disposes of 70% stake in food items maker after profit shortfall

TheEdge Fri, Jul 05, 2019 10:46am - 10 months ago

KUALA LUMPUR: Animal health specialist Sunzen Biotech Bhd is disposing of its 70% stake in food items manufacturer Amplio Ingredients Sdn Bhd for RM1.5 million as the latter was unable to procure the level of net profit agreed upon in the acquisition agreement last year.

In a filing with Bursa Malaysia, Sunzen said it had entered into a settlement agreement with Amplio and its chief executive officer Low Yuan Heng to settle and resolve controversies and disputes arising from agreements it had with them.

Sunzen acquired the 70% stake in Amplio from Low and Amplio director Cheong Wai Loon on May 8, 2018 for RM2.8 million, with the promise from the owners that Amplio would be able to procure a profit sum of RM800,000 in the first year upon completion of the share sale agreement, and a further RM1 million and RM1.2 million during the second year and third year respectively.

However, on May 30, Sunzen announced that Amplio only managed to secure a profit of RM35,291 in the first year, and hence, Sunzen withheld the remaining RM800,000 of the purchase consideration, payable to Low and Cheong.

Following that, the board of directors of Sunzen decided that it is in the best interest of the company to dispose of its shares in Amplio in an amicable manner in order for Sunzen to focus on its other core businesses.

It said the proceeds from the disposal will be used for working capital of the company and defraying estimated expenses in relation to the settlement.

As a result of the disposal, however, Sunzen will incur a loss of RM500,000.

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