SINGAPORE - Catalist-listed MeGroup, through Menang Nusantara Holdings, on Wednesday (April 3) said it will buy an additional 25-per cent stake in subsidiary MJN Motors for up to RM3.75 million (S$1.2 million).
This will bring its indirect stake in MJN Motors which owns and operates the group's Honda dealerships, to 80 per cent from 55 per cent. Menang Nusantara Holdings is a wholly owned subsidiary of MeAG, which is in turn a unit of MeGroup, the automotive dealer and component manufacturer said in a bourse filing.
MeGroup will pay up to RM3.75 million to vendors Wong Sai Hou and Tan Kian Boon, who are also directors of MJN Motors. This will be done in two tranches, in consideration of the audited financial statements of MJN Motors for fiscal 2019 and 2020.
Mr Tan, who owns a 20 per cent stake in MJN Motors, will get up to RM3 million.
The first tranche payment can be done either through the issue and allotment of new MeGroup shares at a price of $0.205 per share, representing a 11.3 per cent premium to the weighted average price of MeGroup shares of $0.1842 as at March 4.
Mr Tan can also opt for a cash payment worth 20 per cent of two times the audited net profit after tax (NPAT) of MJN Motors for fiscal 2019, not exceeding RM800,000.
For his second tranche payment, Mr Tan will get a cash sum equivalent to two times of the NPAT for fiscal 2020 or a sum not exceeding the total final price cap of RM3 million.
Meanwhile, Mr Wong, who owns a 5 per cent stake, will get at most RM750,000. His first and second tranche payment will be paid in cash a sum worth 5 per cent of two times the NPAT of MJN Motors for fiscal 2019 and 2020, the first tranche not exceeding RM200,000.
The completion of the deal should take place no later than Sept 30, 2019, the group added.
The deal would also result in the allotment and issue of a maximum of around 1.3 million MeGroup shares, representing around 1.08 per cent of the enlarged issued and paid-up share capital of the group.
Mr Wong, considered an interested person, is MeGroup's head of group expansion and strategy and dealerships, and is the son of executive chairman and CEO Wong Cheong Chee, and brother of the group's executive director Wong Keat Yee.
Mr Tan meanwhile, is not related to any of the group's directors, executive officers, substantial shareholders or their associates, the group disclosed. Both will continue to serve as directors of MJN Motors.
The company looks to "potentially improve" the future earnings of the group, after it was reported that car brand Honda was the top selling non-national marque in Malaysia for 2018, with 102,282 units sold.
MeGroup is looking to benefit from potential upsides from new cars sold at the group's Honda dealerships should the trend continue in 2019, as well as from the car body paintwork and collision repair services to be offered by the group's Honda dealership in Cheras, Kuala Lumpur upon completion of upgrading works.
The company's sponsor, CIMB Bank (Singapore branch), will be making an application on behalf of the company to the Singapore Exchange Securities Trading (SGX-ST). Announcements would be made by the company once approval-in-principle for the listing and quotation of the shares has been obtained from SGX-ST.