F&B SPAC Red Sena drops qualifying acquisition plan

PETALING JAYA: The first and the only food and beverage (F&B) special purpose acquisition company (SPAC) Red Sena Bhd has scrapped its qualifying acquisition (QA) plan in view of the fast approaching three-year deadline of December 10.
The group said in a filing with the stock exchange that with five months remaining to the deadline, the board of directors concluded after deliberation that it will not be able to go ahead with the acquisition, taking into consideration the processes and approvals required to complete the acquisition.
Red Sena attributed the failure to sign a sale and purchase agreement (SPA) to factors such as uncertainties over deals and unrealistic valuation.
"As explained earlier, our failure to sign a conditional SPA was due principally to two factors, namely, the concerns with deal certainty and unrealistic valuation. The potential vendors that we had approached were concerned with the risk of the proposed acquisition not being approved by the requisite 75% majority of shareholders of Red Sena."
"The other factor was that the valuation demanded by potential vendors were very much higher than what we would consider as reasonable. Investing in a QA which is too expensive will not be value accretive to the shareholders of Red Sena and would destroy shareholder's value," it added.
Red Sena will be dissolved, wound up and liquidated under the Companies Act 2016 in accordance with all applicable laws and regulations should it fail to complete a QA within the permitted timeframe. The process will commence within 60 days after the expiry of the permitted timeframe.
Red Sena raised RM400 million through the issuance of 800 million shares through its initial public offering in December 2015, of which RM368 million has been put into a cash trust account as required for SPACs.
Red Sena is the only SPAC in the F&B segment as the others are in the oil and gas segment. Reach Energy and Hibiscus Petroluem Bhd are the only two SPACs to have successfully graduated out of the category, while CLIQ Energy Bhd and Sona Energy Bhd had to be liquidated after failing to secure their QA.
Red Sena fell 1.04% to close at 47.5sen with 61,600 shares done.