not vested
Abric board keen to monetise business given interest shown by foreign party
July 23, 2014
BY LIZ LEE
Abric’s manufacturing facilities are among the largest and most modern in the industry, being able to produce over one billion security seals yearly. Its three manufacturing plants are in Perak, Malaysia, Thailand and Shanghai, China.
PETALING JAYA: The board of Abric Bhd is looking to divest its core business and explore other opportunities, given the entry of a foreign party who is interested in its security sealing solutions business.
A source said if the board agreed to the foreign party’s offer terms post the due diligence exercise, Abric would go ahead and unlock the value of its entire business in manufacturing and selling security seals.
“Abric will become a Practice Note 16 cash counter. The board will decide what to do with the money later as there is no concrete plan at the moment,” the source said, adding that part of the divestment proceeds would be distributed to shareholders while a portion would be kept by the board for future ventures.
If Abric’s divestment goes through, it will have six months to regularise and decide on its next course.
The source said the undisclosed foreign party was a “big multinational company” but did not elaborate on the nature of business it was involved in.
“The board thinks this is a good time to monetise the business,” the source explained.
In its 2013 annual report, Abric noted that it was a leading security seal provider selling to 88 countries.
The company, established in 1983, has a patent for a security seal which was initially used for the plantation industry in Malaysia. The security seal design is now a global industry standard.
Abric’s manufacturing facilities are among the largest and most modern in the industry, being able to produce over one billion security seals yearly.
Its three manufacturing plants are in Perak, Malaysia, Thailand and Shanghai, China.
On Monday, Abric announced on Bursa Malaysia that it received a non-binding indication of interest from an undisclosed party to acquire its core business.
The company said its board had deliberated on the matter and had agreed to offer exclusivity to the interested party for a due diligence exercise to be conducted for the purpose of determining the definitive terms of the offer.
The due diligence is expected to be completed within two months.
The board had said the interest was at the preliminary stage as the due diligence had yet to commence which may or may not lead to a definite offer from the interested party.
Company executive chairman Datuk Ong Eng Lock owns a 7.07% stake in Abric while his spouse is indirectly a major shareholder of the company via Abric Capital Sdn Bhd with a 28.90% stake.
Abric closed 1.5 sen lower yesterday at 69 sen. In the intra-day trade, the counter rose as high as 73 sen, on a volume of 2.49 million shares.
Last Thursday, it hit a year-to-date high of 72.5 sen, 159% up from 28 sen at the start of this year.
Abric’s net profit for the first quarter ended March 31, 2013 slipped to RM333,000 from RM610,000 a year ago, mainly due to a decrease in revenue and higher raw materials and labour costs, which affected its margins from sales.
Revenue for that period was lower at RM19.09mil from RM20.07mil a year earlier.
In the notes accompanying the financial results, the company said the Asia-Pacific and America regions were expected to contribute to sales growth as the sluggish economic condition and shrinking purchasing power in Europe continued to challenge the group, along with rising operating expenses especially raw materials and labour costs.
Source: The Star