Palette Multimedia buys 51% stake in Genopharma
PETALING JAYA: Information technology company Palette Multimedia Bhd is buying a 51% stake in traditional Chinese medication trader Genopharma Sdn Bhd for RM1.53 million in an all-share deal.
The company’s stock closed down half a sen to 6.5 sen yesterday. The issue price for the new shares has not been determined.
Palette Multimedia, which made a half a million net loss on revenue of RM222,000 for the first quarter ended Aug 31, 2016, said the proposed buy will enable Palette Multimedia to expand its earning base and invest in a profitable business. It has a three-month period to do due diligence on the financial status and affairs of Genopharma.
The proposed buy comes with a profit guarantee by the vendors, Liao Chunhua, Liu Zhen and Tan Yi Wen, for the next three financial years subsequent to 2016 to be at least RM1 million for financial year ending June 30, 2017, RM1.5 million for FY 2018 and RM2 million for FY 2019. The vendors will make up for any shortfall.
Independently, Palette Multimedia undertakes to provide additional working capital of up to RM1 million for FY 2017 and on cumulative basis no more than the profits so guaranteed in any of the financial year into Genopharma as a loan on needed basis. The loan is repayable on demand.