Friday 29 Mar 2024
By
main news image

KUALA LUMPUR (Jan 27): Texchem Resources Bhd’s major shareholder Texchem Holdings Sdn Bhd is acquiring from the former’s subsidiary, a 1.61% stake in the listed industrial outfit, in order to comply with a ruling that a subsidiary cannot hold shares in its holding company.

According to a filing to Bursa Malaysia this evening, Texchem Holdings is buying the 1.61% stake in Texchem Resources for RM2.61 million cash, from Texchem Corporation Sdn Bhd (Texcorp), that is actually a 73.81%-owned subsidiary of Texchem Resources itself.

Texcorp became a subsidiary of Texchem Resources (fundamental: 0.4; valuation: 1.2) on May 17, 2013, and currently owns as much as a 21.07% stake in its holding company listed on Bursa.

Under the Companies Act, 1965 (“Act”), a subsidiary company cannot hold shares in its holding company.

“As such, pursuant to Section 17 of the Act, Texcorp is required to dispose of the Texchem Resources shares within twelve months or such longer period, as the High Court of Malaya may allow after Texcorp became a subsidiary of Texchem Resources,” a filing to Bursa reads.

On May 6, 2014, Texcorp has been granted an Order by the Penang High Court for an extension of time of twelve months from May 17, 2014, to dispose of the Texchem Resources shares, namely the new deadline for Texcorp to dispose of the shares is May 16, 2015.

“The proposed disposal is part of the effort of Texcorp to dispose of the Texchem Resources shares, in order to comply with the requirement of Section 17 of the Act within the Extended Deadline,” said Texchem Resources in the announcement today.

Following the purchase of the 1.61% stake, Texchem Holdings’ shareholding in Texchem Resources will be increased from 31.38% to 32.99%.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

      Print
      Text Size
      Share