G Neptune issued its circular today on its proposed regularisation plan. The proposed regularisation plan is expected to address its Guidance Note 3 (GN3) status as well as to return it to a stronger financial standing and profitability that will benefit all stakeholders, upon completion.
The said plan includes amongst others, the proposed acquisition of the entire equity interest in Southern Score from Super Advantage for a purchase consideration of RM252.0 million to be satisfied through the issuance of 1.68 billion shares.
For the record, Southern Score is a construction management services company with a recorded net profit of RM6.51 million, RM19.20 million and RM35.18 million in the financial year ended 31 December 2019, 2020 and 2021 respectively.
Meanwhile, Super Advantage, being the vendor of Southern Score, has provided cumulative net profit guarantee of RM80.0 million over the three-year period from 2022 to 2024. Super Advantage is held by Tan Sri Datuk Seri Gan Yu Chai, the Managing Director of Southern Score, a veteran in the construction and property development industries with more than 30 years’ experience as well as Gan Yee Hin, the Executive Director and Chief Executive Officer of Southern Score.
On top of that, the proposed regularisation plan also entails the proposed consolidation of every ten existing shares in G Neptune into one consolidated share; proposed settlement of debt amounting to RM3.1 million to Mr. Chai Tham Poh, an Executive Director of G Neptune, via the issuance of 20.67 million shares; proposed private placement of 543.05 million shares at an issue price to be determined later but shall not be less than 20 sen per share to eligible investors to be identified later; and proposed exemption under the take-over rules from the obligation to undertake a mandatory take-over offer for the remaining G Neptune shares not already owned by Super Advantage as well as Tan Sri Datuk Seri Gan Yu Chai and Gan Yee Hin.
Through the proposed private placement, G Neptune aims to raise at least RM108.61 million to be used for amongst others, the purchase of building materials and repayment to contractors for future construction projects, as well as for TCS SS Precast Construction, a CIDB Grade 7 contractor in which Southern Score owns a 35% stake.
Additionally, it is proposed that the Company name “G Neptune Berhad” be changed to “Southern Score Builders Berhad” to better reflect the Company’s corporate identity going forward.
“The proposed acquisition of Southern Score is an integral part of the regularisation plan as it will enable G Neptune to enter into the construction industry which is a thriving and growing industry. This will also help in regularising the Company’s financial condition as it currently does not have a core business to sustain its listing status. We expect Southern Score to benefit from the growth in the construction sector which is expected to be positive in 2022 following the reopening of Malaysia’s economy,” Gan Yee Hin commented.
“We also intend to venture into the manufacture of Industrialised Building Systems (IBS) products through TSPC as we see demand rising given that the construction sector is moving towards the adoption of IBS for better construction quality and productivity, less dependency on foreign labour as well as lower costs. Government initiatives are also supportive of this adoption,” he added.
The proposed regularisation plan and the proposed change of name are subject to, amongst others, GNB shareholders’ approval at the forthcoming general meeting to be held on 13 September 2022.
