WZ Satu Bhd is considering acquiring a 100 percent stake in Citaglobal Engineering Services Sdn Bhd (CESSB) from Citaglobal Sdn Bhd, the private vehicle of WZ Satu’s chairman and largest shareholder, Tan Sri Mohamad Norza Zakaria.
According to a bourse filing, the indicative value of CESSB is RM140 million. The transaction will be completed by the issuance of new WZ Satu shares as well as new redeemable convertible preference shares (RCPS).
WZ Satu and Citaglobal have signed a binding agreement to explore and negotiate further.
With the interesting development, the group says the injection will come with a profit guarantee and will help WZ Satu return to profitability in the financial year ending Dec 31, 2022, and it will have the major shareholder of Genetec Technology Bhd Aaron Chen Kai Voon on board along with a number of new shareholders.
This will be done via a private placement exercise at 17 sen per share.
The proposed acquisition comes with an aggregate net profit guarantee of RM60mil for three (3) full financial years ending 2022, 2023 and 2024.
CESSB is a Bumiputra private limited company with an order book of approximately RM500 million, and it is principally engaged in engineering consultancy services and other related services.
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.
“With this exercise, WZ Satu will be my flagship company, and I intend to bring the company to greater heights. I look forward to growing WZ Satu to becoming a serious player in the facilities management, telecommunications, energy, infrastructure and technology sectors” said Norza.
“For a start, we are looking to transform WZ Satu. This will be possible with the profit guarantee Citaglobal is providing. We are already identifying and looking to bid for more projects as we are ready,” added Norza.
WZ Satu has been loss-making since 2018. For its six months to June 30, 2021, the company recorded a net loss of RM2.03mil on the back of revenue of RM127.7 million.
Meanwhile, the RM140 million for this proposed acquisition is proposed to be satisfied by WZ Satu via RM80 million in shares and RM60 million via redeemable convertible preference shares (RCPS).