Sunzen Biotech Berhad (KLSE:SUNZEN) completed the acquisition of Finsource Solution Sdn Bhd from Teo Yek Ming, Ching Chee Pun, Lee Ching Yong and Low Chee Yeap.
Sunzen Biotech Berhad (KLSE:SUNZEN) entered into a conditional share sale agreement to acquire Finsource Solution Sdn Bhd from Teo Yek Ming, Ching Chee Pun, Lee Ching Yong and Low Chee Yeap for MYR 12.4 million on January 12, 2021. In consideration of Sunzen Biotech acquiring the sale shares, Teo Yek Ming and Ching Chee Pun ("Guarantors") guarantee and covenant with Sunzen Biotech in certain proportion that the audited profit after tax of Finsource for the years December 31, 2021 and December 31, 2022 shall not be less than MYR 2 million on a cumulative basis. The consideration for the purchase of the sale shares shall be 41.2 million shares of Sunzen Biotech comprising of 29.1 million shares to be paid on completion to Teo Yek Ming, Ching Chee Pun, Lee Ching Yong and Low Chee Yeap in certain proportion and 12.1 million shares to be paid to them in certain proportion, which shall be released based on the performance of certain profit guarantee. Teo Yek Ming will receive 15.5 million shares on completion and 10.9 million shares based on profit guarantee. Ching Chee Pun will receive 2.9 million shares on completion and 1.2 million shares based on profit guarantee. Lee Ching Yong will receive 4.1 million shares on completion and Low Chee Yeap will receive 6.6 million shares on completion. As at December 31, 2019, outstanding amounts of MYR 3.5 million and MYR 1.9 million owing by Finsource to a director and Nozo Capital Sdn Bhd, were advances given for working capital purposes. Save for the purchase consideration and any liabilities arising as a consequence of consolidating Finsource as a subsidiary of Sunzen Biotech, Sunzen Biotech will not be assuming any other liabilities including contingent liabilities pursuant to the deal. The existing liabilities of Finsource, including the advances owing by Finsource to a director and Nozo Capital Sdn Bhd, will be settled in the ordinary course of business and shall be interest-free, unsecured and with no fixed term of repayment. Teo Yek Ming holds 1.3 million shares representing 64%, Ching Chee Pun and Lee Ching Yong each hold 0.2 million shares representing 10% and Low Chee Yeap holds 0.32 million shares representing 16% of Finsource. Upon completion of the deal, Finsource will be a wholly-owned subsidiary of Sunzen Biotech. As of October 31, 2020, Finsource had net assets of MYR 9.4 million and net assets of MYR 4.1 million.
As at the date of the agreement, the net asset of Finsource is not less than MYR 3.7 million. In conjunction with the deal, Sunzen Biotech intends to undertake the proposed diversification of the business activities of Sunzen Biotech and its subsidiaries to include money lending (“Proposed Diversification”). The Proposed Diversification is inter-conditional with the deal. The deal is subject to conditions such as Sunzen Biotech having obtained a shareholders’ resolution for the acquisition of the sale shares and the allotment and issuance of the consideration shares, being passed at the extraordinary general meeting (“EGM”) of Sunzen Biotech, the approval of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the listing of and quotation for the consideration shares on the ACE Market of Bursa Securities, if applicable, Teo Yek Ming, Ching Chee Pun, Lee Ching Yong and Low Chee Yeap having obtained the written consent from the financiers/creditors of Finsource, for the sale and transfer of the sale shares, Teo Yek Ming, Ching Chee Pun, Lee Ching Yong and Low Chee Yeap shall procure and ensure that all the licenses, approvals, permits, authorizations and consents (including any renewal(s)) that are required for the moneylending business operation of Finsource have been obtained (or waived, if capable of being waived under the prevailing laws and regulations) and are valid, subsisting and enforceable, Sunzen Biotech being satisfied in all respects with the results of the legal and financial due diligence reviews and any other inquiries and investigations into the business, matters and affairs of Finsource and Teo Yek Ming, Ching Chee Pun, Lee Ching Yong and Low Chee Yeap procuring the issuance of approval or waiver, and settlement of any compound (if any) issued by the Ministry of Housing and Local Government (The Moneylenders and Pawnbrokers Division) in respect of the application for the change of business name from “Save Solution Sdn Bhd” to “Finsource Solution Sdn Bhd” submitted on August 17, 2020. The proposals are not conditional upon any other corporate exercise/scheme undertaken or to be undertaken by Sunzen Biotech, if any. The day when the last condition precedent is fulfilled, obtained or waived (as the case may be) within the conditional period, shall referred to as the “Unconditional Date”. Subject to the satisfaction (or the waiver (as the case may be)) of the conditions precedent and subject to the pre-completion obligations, the completion of the sale and purchase of the sale shares shall take place on a business day falling 14 days after the Unconditional Date or any other date as may be mutually agreed in writing between the parties. Barring any unforeseen circumstances, the Board of Sunzen Biotech expects the proposals to complete by the first half of 2021. Upon completion of the agreement, the Board of Sunzen anticipates that the deal may potentially contribute 25% or more of the net profits of Sunzen Group and/or result in a diversion of more than 25% of the NA of Sunzen In this respect, the Board of Sunzen Biotech has appointed Thinkat Advisory Sdn Bhd to act as the independent adviser to advise the non-interested directors and non-interested shareholders of Sunzen Biotech as to whether the proposals are fair and reasonable so far as the non-interested directors and non-interested shareholders of Sunzen Biotech are concerned, and whether the proposals are detrimental to the interest of the non-interested shareholders of Sunzen Biotech. M&A Securities Sdn. Bhd. and Thinkat Advisory Sdn Bhd acted as financial advisors to Sunzen Biotech.
As of March 1, 2021, Bursa Malaysia Securities Berhad (“Bursa Securities”) had, vide its letter dated March 1, 2021, approved the listing of and quotation for 41,212,121 new shares in SUNZEN to be issued pursuant to the transaction. As of May 4, 2021, Board of Sunzen Biotech waived the conditions for issuance of approval or waiver, and settlement of any compound (if any) issued by the Ministry of Housing and Local Government and share sale agreement become unconditional. As of March 19, 2021, transaction is expected to complete in mid July 2021. As of May 4, 2021, last of the conditions precedent set out in the share sale agreement have been fulfilled or waived, accordingly the share sale agreement has become unconditional and transaction is expected to complete on May 18, 2021. As of May 17, 2021, Sunzen Biotech Berhad and the Vendors have mutually agreed to extend the completion of the share sale agreement for a further period of 14 days from 18 May 2021 and transaction is expected to complete on June 1, 2021.
Sunzen Biotech Berhad (KLSE:SUNZEN) completed the acquisition of Finsource Solution Sdn Bhd from Teo Yek Ming, Ching Chee Pun, Lee Ching Yong and Low Chee Yeap on June 1, 2021.
