Systech forges ahead with transformation plan

Shareholders approve proposed Wilstech deal, share issue and bonus warrants and ESS

PETALING JAYA: Systech Bhd, an information technology solutions specialist focusing on human capital management solutions and cybersecurity, is going ahead with its proposed acquisition of the entire equity interest of Wilstech Sdn Bhd for a total purchase consideration of RM75 million – RM20 million in cash and RM55 million via issuance of 152.8 million Systech shares at an issue price of 36 sen per share.

This follows the approval given by shareholders at Systech’s EGM held yesterday.

Shareholders also gave approval for the proposed share issuance of up to 144 million new ordinary shares in Systech (Systech Shares) besides proposed bonus issue of up to 160.7 million new warrants in Systech on the basis of one warrant for every four existing Systech Shares held by entitled shareholders on an entitlement date to be determined and announced later.

Shareholders also approved the proposed establishment of an employees’ share scheme of up to 15% of the total number of issued shares (excluding treasury shares) at any point in time during the tenure of the scheme for eligible directors and employees of Systech and its subsidiaries (proposed ESS).

Speaking after the conclusion of its EGM, Systech executive director Teoh Keng Chang said, “We are certainly excited that our shareholders understand and share our vision for the future of the group. The proposals are a cornerstone of our transformation journey.

“By streamlining operations through divesting non-performing segments and expanding through acquisitions of profit-making portfolios, we are now better equipped to deliver enhanced corporate solutions.”

Following shareholders’ approval of the proposals, he added, they will have stronger resources to deliver the contracts on hand for the provision of artificial intelligence and Internet of Things solutions under their corporate solution business segment.

In the meantime, Teoh said, they are in active discussions with several potential customers hence, the additional proceeds provide the support needed to scale their business.

“Meanwhile, the proposed acquisition creates synergies with our existing offerings. With Wilstech, a one-stop B2B IT specialist, on board, we can expand and diversify our customer base while streamlining resources and unlocking new business opportunities.

“More excitingly, this proposed acquisition includes a profit guarantee by the vendor that Wilstech shall achieve an audited profit after tax of not less than RM5.0 million for a year,” he added.

Separately, he said the proposed bonus issue of warrants, which are issued at no cost to shareholders, serves as a reward for their continuous support all this while.

“On balance, we are upbeat on the outlook of the group as we chart further progress on our transformation journey.

“As we continue to execute our strategic plans, we are confident to see continuous improvement in our financial performances over the coming years,” Teoh said.

The proposals, are expected to be completed by first half of 2024, barring any unforeseen circumstances and subject to all relevant approvals obtained.