PETALING JAYA: Glove maker Careplus Group Bhd and Tang Kin San have entered into a conditional share acquisition agreement with Chang Keng Chiang, Chang Sze Wei and Chang Kai Ping (the vendors) to acquire 100% of Centro Heights Sdn Bhd for RM3.8 million in total.
Tang is a family member of Careplus executive director Loo Teck Looi.
At present, Centro owns Hotel One Garden in Seremban and the purchasers intend to convert the hotel into a hostel. As such, the intended business for Centro is to manage its properties as workers’ hostels for Careplus’ workers.
Separately, the company has entered into a commitment and option agreement with Tang. Both parties agreed that upon successful completion of the proposed acquisition, Tang will be appointed to spearhead the management of Centro, and Careplus has agreed to grant an option for Tang to purchase from Careplus up to 20% equity in Centro.
The call option may be exercised by Tang in one or multiple tranches of not less than 50,000 shares each tranche, at any time within five years from the completion of the proposed acquisition for an exercise price of RM1 per share.
In the event the call option is fully exercised by Tang, the equity interest by Careplus in Centro will be 70%.
“The proposed acquisition will allow Careplus to convert the hotel property and shoplot to be used as Careplus’ workers’ hostel. Presently, the workers’ hostels of Careplus and its subsidiaries are located in several rented premises. The proposed acquisition is part of the group’s plan to consolidate the workers’ hostels into a central location to enable efficient management and ease of administrative purposes,” Careplus said in a stock exchange filing.
It added that the call option also enables the company to secure the engagement of Tang for the management of Centro for at least five years, being the period of the call option, and to utilise Tang’s expertise in managing hostel.
The proposed acquisition is subject to consents of the relevant authorities being obtained to convert both the hotel property and the shoplot to be used as workers’ hostels.
The proposed acquisition is expected to be completed by the fourth quarter of 2020.