PETALING JAYA: ACE Market-listed Techfast Holdings Bhd has obtained shareholders’ approval for its proposed corporate exercises – acquisition of a 35% share in CCK Petroleum Sdn Bhd for RM26.25 million, a private placement of 75.3 million new shares and diversification to include trading of petroleum products, oil bunkering and other related businesses.
Executive director Vincent Tan Wye Chuan said he is confident that the venture into petroleum trading and oil bunkering will open up new markets for the group and provide an alternative income stream.
“We foresee this segment to contribute over 25% of the group’s net profit moving forward, reducing reliance on our existing manufacturing business.”
Currently, Techfast produces self-clinching fasteners, electronic hardware and precision turned parts. It also manufactures mould cleaning rubber sheets and LED epoxy encapsulant materials.
Tan said the group has established a subsidiary, Fast Energy Sdn Bhd, to undertake bunkering, vessel chartering and other related services.
The private placement is expected to raise gross proceeds of RM28.2 million, of which RM16.2 million will be used to pay for the acquisition of CCK Petroleum. The rest will be used for working capital purposes in the new business.
In the acquisition of CCK Petroleum, there is a profit guarantee of RM5 million annually for CCK Petroleum for two years, FY2021 and FY2022. The 35% stake translates into a net profit contribution of RM1.75 million a year to Techfast.
“The proposed acquisition will create a more resilient group with the expansion of our services scope and earnings base. We also intend to broaden CCK Petroleum’s current trading network to include international ports moving forward,” said Tan.
Shareholders’ approval was also obtained for an employee share option scheme (ESOS) with the number of new shares to be allotted not exceeding 30% of total issued shares.
Upon the completion of the acquisition and the private placement and assuming all ESOS options are granted and exercised, the group’s share capital will increase to 454.6 million shares from 251 million shares currently
The exercises are expected to be completed in the first quarter of this year.
