Friday 29 Mar 2024
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KUALA LUMPUR (July 6): Food and beverage (F&B) special purpose acquisition company Red Sena Bhd announced today that it will not be able to secure a qualifying acquisition (QA) by its Dec 10, 2018 deadline, after all.

In a filing today, Red Sena said the announcement was made after taking into consideration "the processes and approvals required to complete the QA" as well as its remaining time frame of five months until the deadline.

"As explained earlier, our failure to sign a conditional sales & purchase agreement (SPA) was due principally to two factors, namely the concerns with deal certainty and unrealistic valuation," it said.

"The potential vendors that we had approached were concerned with the risk of the proposed acquisition not being approved by the requisite 75% majority of shareholders of Red Sena," it added.

The other factor, it said, was the much-higher valuation demanded by potential vendors as opposed to what the firm would consider as reasonable.

"Investing in a QA which is too expensive will not be value accretive to the shareholders of Red Sena and would destroy shareholders' value," it added.

According to Red Sena's company constitution, failure to complete the QA within the permitted time frame would entail the company being dissolved, wound up and liquidated under the Companies Act 2016 within 60 days after the deadline.

In March this year, Red Sena's chief executive officer Joseph Tan Eng Guan said there are few F&B companies for sale in the South East Asian market, with valuation expectation much higher than that in Malaysia amid oversupply of investors and potential buyers.

Red Sena, said Tan, had approached all types of F&B business, and spoken to about 50 Malaysian companies but failed to land anything concrete.

Tan has hinted at the time of possible return of capital to investors if the right opportunity, timing and price do not emerge.

This covers RM368 million or 48.8 sen per share allocated in its trust account, added with RM15 million or 1.5 sen per share outside the account which investors could expect upon failure of securing a QA.

Shares of Red Sena slipped half a sen or 1.04% to close at 47.5 sen each today, giving the group a market capitalisation of RM475 million.

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