KUALA LUMPUR (Mar 14): Complete Logistic Services Bhd (CLSB) is planning to diversify into technology businesses, rename itself Hextar Technologies Solutions Bhd and dispose of its entire stake in Classic Scenic Bhd for RM32.04 million to its majority shareholder Datuk Eddie Ong Choo Meng.

In a bourse filing on Monday (March 14), CLSB said there was a need to diversify into information and communications technology (ICT) solutions and services to seek an alternative source of revenue and mitigate the risk of relying solely on its existing logistics business.

CLSB added that it intends to leverage the knowledge and experience of its recently-appointed group chief executive officer Datuk Seri Gey Ka Hong, who has 25 years of experience in the ICT industry.

The proposed diversification would require its shareholders' approval at its forthcoming extraordinary general meeting as CLSB expects to either divert 25% or more of its net assets to the technology business or receive 25% or more of its net profits from the new division, according to the filing.

Meanwhile, CLSB will also be disposing of its entire stake in Classic Scenic to Ong for RM32.04 million on a willing buyer-willing seller basis, at 76 sen apiece for its 36 million shares or 14.94% stake and 26 sen apiece for its 18 million warrants.

The sale consideration of 76 sen per share represents a 12 sen or 18.94% premium to the five-day volume weighted average market price (VWAP) of Classic Scenic shares of 64 sen, while the 26 sen per warrant represents a three sen or 13% premium to the five-day VWAP of 23 sen.

CLSB had previously acquired the stake in Classic Scenic for RM29.34 million at RM1.64 per share on March 16, 2021 from Lim Ket Leng Holding Sdn Bhd, the private vehicle of the Lim family which had previously controlled a 31.76% stake in Classic Scenic.

The group expects a one-off gain of RM2.65 million from the disposal.

According to CLSB, RM31.64 million from the sale proceeds will be utilised for future investment opportunities or the issuance of a special dividend within 24 months, while RM400,000 will be used to defray expected expenses for the proposals within one month.

Classic Scenic manufactures wooden picture frame moulding and timber products for both domestic and export markets, and also leases properties.

Ong involved in CLSB since March 2021

Ong’s involvement in CLSB had begun on March 9, 2021 when he emerged as a 29.18% shareholder with 37.45 million shares acquired from Dolphin Assets Sdn Bhd in an off-market transaction via his special purpose vehicle, Hextar Tech Sdn Bhd (formerly known as Get Asia Group Sdn Bhd).

Ong had also appointed his representative, Hextar Group of companies’ group chief corporate officer Teh Li King onto CLSB’s board as a non-independent non-executive director on March 8, 2021.

Ong is a major shareholder of listed companies such as Hextar Global Bhd, SCH Group Bhd, Rubberex Corp (M) Bhd, SWS Capital Bhd and, more recently, Opcom Holdings Bhd, while Teh is a director in SWS Capital and a non-independent non-executive director in Opcom.

Hextar Tech had subsequently issued a conditional voluntary takeover offer of CLSB at RM2.50, a 9.79% premium to CLSB’s five-day VWAP at the time on Dec 7, 2021.

A month later on Jan 5, Ong’s takeover offer became unconditional as he had acquired a 55.21% stake (71.03 million shares) in CLSB.

The offer had since lapsed after the Jan 5 announcement, which allowed the offer to be open for acceptance for at least 14 days until 5pm on Jan 19, 2022.

At the time of writing, shares in CLSB were one sen or 0.3% higher at RM3.04, valuing the company at a market capitalisation of RM391.1 million based on 128.65 million outstanding shares.