By PRIYA VASU and ANIS HAZIM / Pic by BERNAMA
WZ Satu Bhd proposes to acquire entire equity interests in Citaglobal Engineering Services Sdn Bhd) from Citiglobal Sdn Bhd for an indicative purchase consideration of RM140 million.
The proposed acquisition comes with an aggregate net profit guarantee of RM60 million for three full financial years ending 2022, 2023 and 2024.
The founder and executive chairman of Citaglobal is Tan Sri Mohamad Norza Zakaria (picture) is also the current executive chairman and president and major shareholder of WZ Satu with a 23% stake.
The RM140 million price tag will be satisfied by WZ Satu via RM80 million in shares and RM60 million via redeemable convertible preference shares (RCPS)
Mohamad Norza’s stake will increase to roughly 60% once upon the acquisition completion. Norza first emerged in WZ Satu on Feb 4, 2020, when he purchased a 10.95% stake in the company. He has since been steadily increasing his stake.
Mohamad Norza’s stake will be diluted by the proposed a private placement to raise RM25.6 million by issuing 150.44 mil shares at 17 sen per share.
WZ Satu identified Aaron Chen Khai Voon, Datuk Jeeventhiran A/L Ramanaidu Francis Sa Chee Peng and Datuk Mufik Affandi Raja Khalid to take up the placement shares.
As at Nov 15, the company had an issued share capital of RM264.32 million comprising 752.23 million shares.
The biggest portion of the placement, 75.2 million shares, will be taken up by Chen Khai Voon for a purchase consideration of RM12.8 million.
He is the co-founder and substantial shareholder of Genetec Technology Bhd.
WZ Satu proposes to utilise the proceeds from the placement on investment in the existing businesses of the Group and on general working capital requirements, its exchange filing stated.
On May 10, 2021, WZ Satu completed a rights issue of 511.66 million ICPS issued at 11 sen each and raised RM56.28 million.
The company posted a net profit of RM2.16 million for the third quarter ended Sept 30, 2021 on the back of its business segments contribution.
The construction company registered a revenue of RM62.7 million in the 3Q21 which was contributed by its civil engineering and construction (CEC), oil and gas (OG), manufacturing and the remaining segments.
For the current year-to-date (YTD), the group recorded a revenue of RM190.4 million with the CEC segment contributing RM86.5 million, OG RM64.9 million, manufacturing RM34 million and remaining segment, M5 million.
WZ Satu is cautiously optimistic of its immediate prospects with several business initiatives already instituted. It has a current order book of RM606 million will ensure the group remains busy in the immediate financial years.
WZ Satu shares will resume trading today (Thursday) after last closing at 22.5 sen on Tuesday.