WMG Holdings launches reverse takeover of Tekala Corp

PETALING JAYA: WMG Holdings Sdn Bhd has proposed to acquire Syarikat Kretam (Far East) Holdings Sdn Bhd (SKHSB), which will lead to a reverse takeover of timber processing firm, Tekala Corporation Bhd, for RM513 million.
The purchase consideration will be satisfied via the issuance of new shares, redeemable convertible preference shares and irredeemable convertible preference shares.
In a filing with the stock exchange yesterday, WMG said it had entered into separate agreements with SKHB to acquire five of its units, Ritai Sdn Bhd, Cosmopolitan Company Sdn Bhd, Syarikat Far East Development Sdn Bhd, Velda Development Sdn Bhd and Wah Mie Realty Sdn Bhd.
The reverse takeover exercise, also entails WMG exchanging the entire issued and paid-up share capital in Tekala on the basis of 133 new 10 sen shares in WMG at an issue price of 50 per share, for every 100 existing Tekala shares held at an entitlement date to be determined later.
Upon completion of the proposed share exchange, the shareholders of Tekala shall become shareholders of WMG, and Tekala shall become a wholly-owned subsidiary of WMG.
SKHSB will emerge as the controlling shareholder of Tekala via WMG, with 56.3% equity interest of the enlarged issued and paid-up share capital of WMG.
Tekala said the proposals present an opportunity for existing shareholders of the company to participate in a proposed new core business in property development that is viable and profitable.
Tekala shares have been trading at low liquidity levels for the past 12 months, up to and including Dec 2 being the last trading day prior to this announcement, with average daily trading volume of less than 0.1% of the issued and paid-up share capital of the company.
“The proposals provide an avenue for shareholders of Tekala to swap their shares in the company with WMG shares and allow them to participate in the future growth of WMG and its proposed subsidiaries via the proposed share exchange,” it said.