Careplus buys property development firm, converts its hotels and shoplots to workers' hostel

Careplus buys property development firm, converts its hotels and shoplots to workers' hostel
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KUALA LUMPUR (July 22): Careplus Group Bhd is buying a 90% stake in a property development firm for RM3.42 million cash, which will see the group consolidating its workers’ hostels into a central location. 

This will be done by converting the property developer’s hotel property and shoplots in Seremban into hostels.  

The group told Bursa Malaysia in a filing today that this is to enable efficient management and ease of administrative purpose. The purchase price will be funded via internal generated funds.  

Today, Careplus and Tang Kin San have entered into a conditional share acquisition agreement (SAA) with the shareholder of Centro Heights Sdn Bhd — namely Chang Keng Chiang, Chang Sze Wei and Chang Kai Ping — for the said acquisition.  

The acquisition, which will be completed in the fourth quarter this year, will see Careplus owning a 90% stake in Centro Heights, while the remaining 10% will be owned by Tang.  

Upon completion of the proposed acquisition, Tang will be appointed to spearhead the management of Centro Heights, to utilise his expertise in managing hostels. 

Separately, Careplus had entered into a commitment and option agreement with Tang, in which the glovemaker has agreed to grant an option for Tang to purchase up to 20% of the issued share capital of Centro Heights.  

In the event that the call option is fully exercised by Tang, Careplus’ equity interest in Centro Heights will shrink to 70%. 

Careplus said the call option may be exercised in one or multiple tranches within five years from the completion of the proposed acquisition. The exercise price payable for the option shares shall be RM1 per share.  

Centro Heights is in the business of property development and investment holdings. At present, Centro owns a hotel in Seremban. In addition, Centro will acquire one unit of double storey shop office, measuring 164 square meters at Seremban.  

The rally in rubber glove shares amid the Covid-19 pandemic lifted Careplus shares to multi-year highs. 

The stock has since risen over 1,000% from 16 sen on Dec 31, 2019 to its closing today at RM1.89, giving it a market capitalisation of RM1.02 billion. Some 24.05 million shares were done.