KUCHING: Hubline Bhd has proposed to acquire a 75 percent stake in Absolute Privilege Sdn Bhd (APSB) for RM16.365 million.The shipping firm has entered into a shares sale agreement with APSB’s major shareholder Pau Chiong Ching (vendor) to acquire 1.5 million shares in the latter. Vendalon Sdn Bhd owns the remaining 500,000 shares or 25 percent equity interest in APSB, whose principal activity is in investment holdings, including property investment.
APSB has its principal asset in two pieces of land in Miri,which is currently used as an office and warehouse respectively.The land is valued at a combined RM38 million. The land size is 8.218 square meters and 6,074 square meters respectively. For one of the two pieces of land at Jalan Krokop Utama, APSB has obtained approval from the Land & Survey director for an extension of the tenure of 99 years for industrial use.
“The purchase consideration of RM16,365,000 (for 75 percent equity interest) was arrived at on a ‘willing buyer willing seller’ basis, after taking into consideration that the properties have been valued by VPC Alliance (Sarawak) Sdn Bhd at RM38,000,000 via their valuation dated August 5, 2019 and the total liabilities of APSB from all sources shall not exceed RM14,200,000 by completion date. “The purchase consideration will be financed through internally generated funds and/or bank borrowings. The breakdown of the source of funding will only be determined later and depend on, amongst others, the cash reserves and future funding requirements of the company,” Hubline said in a filing with Bursa Malaysia.
There are no liabilities, including contingent liabilities and guarantees, to be assumed by Hubline pursuant to the proposed acquisition, save for the existing liabilities of APSB.
On the rationale and prospects for the proposed acquisition, Hubline said the warehouse and about 30 percent of the office space of the properties owned by APSB are presently being tenanted by Hubline subsidiaries for its business operations in dry bulk shipping.
The space where the warehouse in presently situated includes a wharf along the Miri River, which is essential for the smooth operations of the dry bulk business to undertake repairs and similar duties. “As the vendor is seeking to dispose of his shares in APSB, there is a risk that any future/potential acquirer will discontinue/not extend the tenancy of the properties upon the expiry of such tenancy. “With the current shortage of similar properties which match our specific requirements in the area, Hubline has decided to take the majority stake in APSB.
“With the increase scarcity of land along the river front in the area, Hubline believes that there will be an opportunity to enjoy future potential yields in the event it should eventually decide to dispose it in future.” Hubline expects the proposed acquisition to be completed in March-2020 quarter.