Luxchem to buy 55% stakes in three firms for RM121m, to raise up to RM97m via private placement

Luxchem to buy 55% stakes in three firms for RM121m, to raise up to RM97m via private placement

14 Dec 2020

Luxchem Corp Bhd is planning to buy 55% stakes in three firms — Lexis Chemical Sdn Bhd, Lexis Specialties Sdn Bhd and Lexis Corp Sdn Bhd — for a total of RM121 million.

The group proposed to pay for the stakes partly in cash and partly via the issuance of new Luxchem shares to the vendors, Chuah Kim Piew and Lee Juinn Yong, under a heads of agreement signed today.

“The proportion between the cash consideration and the aggregate value of the consideration shares will be determined and agreed by the parties upon the execution of the definitive agreement,” said Luxchem in a filing with the stock exchange.

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It said the issue price of 83 sen per share represents a premium of 2.14% to the one-month volume-weighted average market price of Luxchem shares up to Dec 11 of 81.26 sen.

Lexis Chemical is involved in the manufacturing of industrial chemical products, and Lexis Specialties in the wholesale of industrial chemicals, while Lexis Corp is currently a dormant firm.

Luxchem said a definitive agreement will be entered into between the parties within 75 days or such further extended date as the parties may agree upon.

Upon the completion of the definitive agreement, the profit guarantees of the three companies for the financial years ending Feb 28, 2021, 2022 and 2023 will collectively be not less than an aggregate amount of RM60 million.

Luxchem said none of the directors, chief executive or major shareholders of the company have any interest in the acquisitions.

Separately, Luxchem announced a private placement to raise up to RM97.33 million, of which RM70.32 million will be used to finance any suitable business or investment.

“The potential acquisition and/or investment may include those in the area of the industrial chemicals segment, including those relating to the latex industry,” said Luxchem.

Another RM24 million from the placement proceeds will be used for working capital, the group said.

Upon the completion of this proposed exercise, the group’s enlarged issued share capital will be 1.03 billion shares valued at RM271.7 million.

The placement is expected to be completed by the first quarter of 2021, the group said.

Shares of Luxchem closed three sen or 3.73% lower at 77.5 sen today, valuing the group at RM694.25 million. Year-to-date, the counter has risen 62.5%.

Source: The Edge Markets