This article first appeared in The Edge Financial Daily, on October 15, 2015.

KUALA LUMPUR: Plastic parts manufacturer Asia Knight Bhd, which fell into Practice Note 17 (PN17) status in October last year following a disclaimer of opinion in its financial statements ended June 30, 2014, is looking to regularise its condition by venturing into the construction sector.

In its proposed regularisation plan submitted to Bursa Malaysia on Tuesday, Asia Knight said it had entered into a conditional share sale agreement to acquire 100% of construction company PA Builders Sdn Bhd from Mazlan Mohd Yunus and Foo Onn (the vendors), for a purchase consideration of RM75 million, to be satisfied via RM5 million cash and 350 million new Asia Knight shares at an issue price of 20 sen each.

In return, the vendors agreed to warrant to Asia Knight that the profit after tax of PA Group for the financial years ending July 31, 2016  and July 31, 2017 shall not be less than RM8 million per annum.

“The proposed acquisition will allow Asia Knight to venture into the construction business, an industry with positive growth prospects via a profitable company as a means to improve the financial performance of the group and to enhance its shareholder value,” said Asia Knight.

It added that without the proposed buy, it would not be able to regularise its financial position and would be delisted, given its PN17 status.

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