Pansar eyes diversification via RM151m acquisition of Sarawak builder

The Edge Markets – 09 September 2020

KUALA LUMPUR (Sept 9): Engineering solutions provider Pansar Bhd plans to diversify its business to include construction and civil engineering through the acquisition of Sarawak-based builder Perbena Emas Sdn Bhd for RM151 million cash.

Pansar said the proposed acquisition will enhance shareholder value and serves as a strategic entry into the construction industry in Sabah and Sarawak. Perbena has an existing order book of RM645 million and is in advanced stages of tendering for more than RM2 billion worth of new projects.

However, the exercise is deemed to be a related party transaction in view of the interests of certain directors and major shareholders of Pansar in the proposed acquisition.

In a bourse filing today, Pansar said it has entered into a conditional share purchase agreement with PE Holdings Sdn Bhd for the proposed acquisition.

Pansar said it intends to fund 80% of the purchase consideration through proceeds raised from a proposed rights issue and the remaining 20% from bank borrowings.

It plans to undertake a renounceable rights issue of up to 346.5 million new redeemable convertible preference shares (RCPS) in Pansar on the basis of one RCPS for every two existing shares in the company.

As at Aug 14, Pansar’s issued share capital totalled RM152.38 million comprising 458.65 million shares, which excludes 4.02 million treasury shares held by Pansar. Additionally, there are 230.32 million existing warrants in Pansar.

Based on the indicative issue price of the RCPS of 53 sen per RCPS, representing a 25.4% discount to the theoretical ex-rights price of Pansar shares up to Aug 14 of 71 sen, the proposed rights issue is expected to raise between RM121.54 million and RM183.65 million.

“Upon completion of the proposed acquisition, the board anticipates the revenue and earnings stream from Perbena’s core business of construction and civil engineering to contribute more than 25% to the net assets or net profits of the group,” said Pansar.

It added that Perbena’s construction business has been generating revenue ranging from RM338.68 million and RM386.53 million for the past three years.

UOB Kay Hian Securities (M) Sdn Bhd has been appointed as the principal adviser for the proposals, which are expected to be completed by the first quarter of 2021.

Pansar’s share price closed down 0.5 sen or 0.67% at 74 sen today, with 379,200 shares traded. Its market capitalisation stood at RM342.38 million.