SCGM Bhd, a Practice Note 16 (PN16) company, has initiated an agreement to acquire the entire equity interest in Eramas Global Group Sdn Bhd.
The move will serve as part of its regularisation plan aimed at addressing SCGM's status as a cash company.
Eramas Global and its subsidiaries are actively involved in the sale, distribution, and manufacturing of coconut-related products, palm oil, fat products, and dairy items, both locally and internationally.
SCGM told the stock exchange that it had today entered into a heads of agreement (HOA) with Chin Kok Tian, Yan Hua Lan, Tan Ah Tek, Gan Chuan Lee, Tey Chee Shin, Tan Tai Chong, and Lau Sie Khian, for the acquisition of the entire equity interest in Eramas Global.
The terms of the agreement stipulate that SCGM and the vendors of Eramas Global will finalise the acquisition through a definitive agreement, subject to thorough due diligence encompassing financial, legal, and operational aspects of the target group.
The purchase consideration is yet to be determined, with SCGM considering settlements through cash payments or the issuance of new ordinary shares at an issue price of 61.5 sen per share.
The definitive agreement is expected to be concluded within 180 days from the date of the HOA, with provisions for a potential extension of 30 days, or as mutually agreed upon.
The proposed acquisition constitutes a related party transaction due to, Chin Kok Tian, Yan Hua Lan, and Tan Ah Tek, are substantial shareholders collectively holding approximately 24.15% equity interest in SCGM.
These interested parties have committed to abstain from voting on resolutions related to the acquisition, and SCGM has appointed Inter-Pacific Securities Sdn Bhd as the principal adviser for its proposed regularisation plan.
Additionally, an independent adviser will be enlisted to advise non-interested directors and shareholders on the acquisition before the definitive agreement is executed.
On May 9, 2022, a Johor-based company announced the sale of its core food packaging operations to two Tokyo-listed Japanese parties, Mitsui & Co Ltd and FP Corp (FPCO), for RM544.38 million.
This transaction resulted in the company transforming into a listed shell company, classified as a "cash company."