PN17 China Automobile ends MoU to buy Master Tec as latter's late financial statements stymie regularisation plan

TheEdge Thu, Jan 27, 2022 10:13pm - 2 years View Original


KUALA LUMPUR (Jan 27): China Automobile Parts Holdings Ltd (CAP) is terminating the Memorandum of Understanding (MoU) to buy Master Tec Wire & Cable Sdn Bhd with immediate effect.

Last month, CAP signed the MoU with Master Tec’s shareholder and director Datuk Lau Kim San to acquire the entire equity interest of the target company, which is principally engaged in the manufacturing, trading and sale of wires and fibre optic cables.

The acquisition was part of CAP’s plan to regularise its PN17 status and maintain its listing on the Bursa Main Market.

CAP said the proposed acquisition involved the incorporation of a new holding company (Newco), with the target company to be acquired via the issuance of Newco’s shares.  

The exercise also included a proposed exchange of CAP shares with Newco shares, proposed shares placement by Newco and a proposed transfer of listing status from CAP to Newco.

In a bourse filing on Thursday, CAP said its board has resolved to terminate the MoU, after taking into consideration that Master Tec’s audited financial statements (AFS) for the financial year ended Dec 31, 2021 (FY21) will only be issued in May this year.

CAP noted, the late issuance of Master Tec’s FY21 AFS may potentially delay the formulation of the proposed regularisation plan and its subsequent announcement and submission of the said plan.

According to CAP, the termination of the MoU is not expected to have any financial impact on the company.

“The board will seek other alternatives to formulate a proposed regularisation plan for submission to Bursa Securities, so that the company could avoid the de-listing process by Bursa Securities,” it added.

This is the fourth deal — and attempt to regularise its financial situation — to have fallen through.

Its plan to inject Singapore-based Tenda Construction Equipment Pte Ltd and Tenda Equipment & Services Pte Ltd failed in December last year; followed by Klang Valley property developer Idaman Sejiwa Development Sdn Bhd (failed in May 2021), and another failed attempt in December 2019 to acquire Local Assembly Sdn Bhd — a subcontractor assembler of electrical appliance and equipment, and plastic injection moulded components manufacturer.

The group’s external auditor CAS Malaysia PLT has also expressed a disclaimer of opinion of CAP’s audit reports for the financial year ended June 30, 2017 (FY17), FY18, FY19, FY20 and FY21.

CAP shares have been suspended from trading since June 8, 2017, after it failed to release its financial reports within the stipulated time.

It slipped into PN17 status in January 2018, after its external auditor Messrs PFK expressed an audit disclaimer of opinion in the company’s audited financial statements for FY15 on undisclosed material liabilities.

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