Power Root to in­crease stake in sub­sidiary to 91% from 77%

The Sun (Malaysia) - - SUNBIZ -

PETALING JAYA: Power Root Bhd has pro­posed to in­crease its stake in its sub­sidiary com­pany Power Root ME FZCO (PRMF) from 77% to 91% for RM49.6 mil­lion, through the is­suance of 24.2 mil­lion new shares of RM2.05 a share.

In a fil­ing with Bursa Malaysia last Fri­day, Power Root said it en­tered into a con­di­tional share agree­ment with Wong Tak Keong (ven­dor) for the pro­posed ac­qui­si­tion of seven or­di­nary shares of UAE Dirham 100,000 each in PRMF rep­re­sent­ing 14% of the eq­uity in­ter­est in PRMF.

“The pro­posed ac­qui­si­tion will al­low Power Root to in­crease its eq­uity in­ter­est in PRMF from 77% to 91%, thereby al­low­ing Power Root Group to con­sol­i­date the earn­ings at­trib­ut­able to the sale shares. In ad­di­tion, the pro­posed ac­qui­si­tion is not ex­pected to ex­pose Power Root to new busi­ness and op­er­a­tional risks as PRMF is an ex­ist­ing sub­sidiary of Power Root,” it said.

In­cor­po­rated in Jebel Ali Free Zone in Fe­bru­ary 2012, PRMF was a re­sult of the group’s strat­egy to ex­pand its op­er­a­tions to the UAE and ex­pand the dis­tri­bu­tion net­work of the group.

Over the years, about a quar­ter of the group’s rev­enue has been con­trib­uted by PRMF due to dis­tri­bu­tion of var­i­ous bev­er­age prod­ucts in the UAE.

The rev­enue recorded by PRMF for the fi­nan­cial year ended March 31, 2016 (FY16) and the 13-months fi­nan­cial pe­riod ended March 31, 2015 rep­re­sent 28.6% and 28.5% of the group’s to­tal rev­enue for the re­spec­tive fi­nan­cial years.

The com­pany said that the is­suance of con­sid­er­a­tion shares will lessen the cash out­lay of Power Root Group for the pro­posed ac­qui­si­tion, which Power Root Group may oth­er­wise chan­nel to­wards its op­er­a­tions and other work­ing cap­i­tal re­quire­ments.

The deal is ex­pected to be com­pleted by the fourth quar­ter of 2016, pend­ing ap­proval from Bursa Se­cu­ri­ties.

RHB In­vest­ment Bank Bhd is ad­viser for the pro­posed ac­qui­si­tion.

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