Weida to buy land owner for RM6 million

PETALING JAYA: Weida (M) Bhd has terminated a RM6 million land deal with Premium Fortune Sdn Bhd (PFSB) and instead plans to now acquire the company.
In a filing with Bursa Malaysia yesterday, Weida said its wholly-owned subsidiary Weida Integrated Industries Sdn Bhd (WII) had entered into a deed of rescission and termination with PFSB to mutually rescind, revoke and terminate a sale and purchase agreement (SPA) on Tuesday.
The SPA, dated Aug 17, 2015, was in relation to the acquisition of a 40,140 sq m land in Kuching, Sarawak, for RM6 million cash.
WII on Tuesday entered into a sale of shares agreement (SSA) with related parties Datuk Lee Choon Chin and Jee Hon Chong (collectively known as the vendors) to acquire the entire equity interests in the issued and paid-up share capital of PFSB for RM6 million cash.
“The rescission and the proposed share acquisition were deliberated and negotiated between WII and the vendors. Both parties have agreed that the proposed share acquisition is more cost efficient from a transactional costs perspective than the proposed land acquisition, therefore the rescission and proposed share acquisition is a mutually beneficial arrangement for WII, the vendors and PFSB,” it said.
Under the SSA, WII will acquire 5,000 ordinary shares of RM1 each representing the entire issued and paid-up share capital of PFSB, which will result in PFSB becoming a wholly-owned subsidiary of WII.
PFSB is a special purpose vehicle set up to own the land and has no other business transactions. PFSB acquired the land on Aug 16, 2000 and leased it to WII for its manufacturing operations.
The land has a leasehold tenure expiring on Dec 31, 2037. PFSB’s original cost of investment was RM935,000 and the net book value of the land as of March 31, 2015 is RM556,127.
According to Weida, the RM6 million purchase consideration for the proposed share acquisition was arrived at after taking into consideration the market value of the land in the vicinity area and the strategic location of the land.
“The land is situated adjacent to WII’s factory. In addition, the land is also located adjacent to Demak Laut Industrial Estate Phase II which is planned by the Sarawak State Government for industrial scheme development.
“The strategic location of the land will provide convenience to WII to cater for its expansion needs. Given the strategic location of the land, there is potential appreciation in value of the land,” it added.
The proposed share acquisition will also result in rental savings of RM60,000 per annum to Weida Group.
Pursuant to the deed of rescission, PFSB will refund to WII the 10% deposit amounting to RM600,000 paid for the proposed land deal. WII will use the refunded amount to pay the deposit pursuant to the terms of the SSA. It intends to fund the proposed share acquisition via internally generated funds.
The proposed share acquisition is expected to be completed within three months.