KUALA LUMPUR (Feb 22): Seacera Group Bhd is acquiring a 70% stake in a firm that has been awarded a RM338 million roadwork contract in Pahang.   

The group will be paying RM35 million for the stake in construction and civil engineering firm Teras Sari Resources Sdn Bhd, via the issuance of 35 million new Seacera shares.  

In a filing with Bursa Malaysia, Seacera said its wholly-owned unit Seacera Builders Sdn Bhd signed a heads of agreement (HoA) to acquire the stake from LT Century Development Sdn Bhd and LTC Holdings Sdn Bhd. 

At RM1, the issue price of its consideration shares is at a premium of 26.58% to Seacera’s volume-weighted average market price (VWAMP) of 79 sen per share for the five-day period ended Feb 21, 2018. 

Seacera said the acquisition may increase the order book of its construction division from RM231.94 million presently — enough to last the company five years — to RM570.1 million. 

On Tuesday, Teras Sari, a Class ‘A’ contractor, won the roadwork contract worth RM338.14 million from the Public Works Department (JKR). 

The contract is for the upgrading of the federal road from Bandar Pekan to Kampung Sungai Miang, Pekan and is valid for four years from March 1. 

For its financial year ended Sept 30, 2017 (FY17), Teras Sari booked a net profit of RM190,000, with net assets of RM590,000. Post-acquisition, LT Century will hold the remaining 30% stake in Teras Sari, whereas LTC will cease to be a shareholder. 

Under the agreement, LT Century and its directors Tee Meng Lee, Lau Tian Fwu, and Chong Wan Shan will also guarantee a total net profit of RM70 million from Teras Sari for the four years, from FY18 to FY21. 

Seacera said the acquisition allows it to increase its order book with a minimal upfront cash outflow, “as the purchase consideration will be satisfied entirely via the issuance of the consideration shares”. 

Shares of Seacera closed unchanged at 79 sen today, giving it a market capitalisation of RM295.61 million.