Sinotop shares flat on RM164m proposal for construction firm

PETALING JAYA: Sinotop Holdings Bhd share price opened flat despite a potential RM164 million bid to buy a 60% interest in construction company Asianmax Corp Sdn Bhd on Friday.
In the last one year the company has lost 43% of its share value. It closed unchanged in morning trade at 43 sen.
On Friday, Sinotop announced that its proposal for Asianmax was to strengthen its existing project management and infrastructure construction-related businesses.
The company told Bursa Malaysia it may consider a rights issue to fund the deal which would include the use of internally generated funds and/or bank borrowings.
The group which is involved in the production of customised woven loom-state fabrics from cotton, synthetic and mixed yarn, said it had entered into a term sheet with Datuk Justin Soo for the proposed acquisition, which would exclude one of Asianmax’s subsidiary, Johnson Fluid Engineering Sdn Bhd, as it is not involved in the business of construction. The term sheet is subject to a definitive share sale agreement between Sinotop and Soo.
Soo will provide a profit guarantee of an aggregate amount of not less than RM50 million for the financial year ending 2019, 2020 and 2021 collectively.
Subject to a definitive agreement, the purchase consideration will be satisfied either through wholly in cash, wholly by the issuance of new redeemable convertible preference shares (RCPS) in Sinotop based on terms to be mutually agreed upon by the company and the vendors at an issue price of 42 sen per RCPS or a combination of both.