AWC postpones plan to buy 60% stake in TWS
PETALING JAYA: AWC Bhd has postponed its plans to acquire a 60% equity interest in rail-related industry services firm Trackwork & Supplies Sdn Bhd (TWS).
AWC said in a filing with Bursa Malaysia that TWS had received a demand letter from a customer claiming RM19mil on the basis that some of its machines supplied were defective.
It added that the claim comprised liquidated agreed damages, cost of rental and expenses for replacement machines.
From the recent development, AWC said it would be assessing the impact of the claim on its proposal for a majority stake in TWS, and had decided to adjourn its shareholders’ meeting to a later date.
The shareholders’ meeting was to vote for the proposed acquisition of the 60% stake in TWS for RM43.5mil.
AWC said the group would only proceed with the completion of the proposals when the sellers and TWS are able to settle the aforesaid claim without any material negative impact on the financial performance of TWS.
“It is in the interest of our shareholders that we adjourn the EGM and look into this material matter to ensure the validity and financial impact of the claim before re-embarking on the proposed acquisition.
“I am confident that the group will resolve this matter at the earliest opportunity,” said AWC managing director and group CEO Datuk Ahmad Kabeer in a statement.
Shares in AWC were last traded at 69.5 sen apiece before being suspended at noon yesterday.
AWC first announced the proposed acquisition of a majority stake in TWS in February that would have seen the company enter the rail maintenance business.
Presently, AWC is involved in the engineering and integrated facility management services for buildings and waste management.
The purchase, which involves a price tag of RM43.5mil, was to be satisfied through a combination of RM20mil cash and the balance RM23.5mil through the issuance of new AWC shares.
The 60% stake acquisition of TWS comes with a cumulative net profit guarantee of RM20mil for the financial years 2018 and 2019, ending Sept 30.
AWC had earlier targeted to complete the whole acquisition exercise this month.
For the third quarter ended March 31, AWC posted a 36% jump in net profit to RM6.86mil from RM5.03mil a year earlier, on the back of an 11.3% increase in revenue to RM75.25 mil from RM67.42mil previously.