KUALA LUMPUR (Oct 29): Candy maker Khee San Bhd's share price soared 15% amid a potential mandatory general offer (MGO) that could be on the horizon, as the effective period of its heads of agreement (HoA) with Wah Kong Corp Sdn Bhd approaches its closing date.
At 11.07am, Khee San rose 3 sen or 12.77% to a two-week high of 26.5 sen, with some 2.29 million shares done, giving the company a market capitalisation of RM30.32 million.
To recap, on Sept 11, Khee San, which defaulted on a RM14.62 million loan repayment, entered into the HoA with Wah Kong to pave the way for negotiations, as Khee San intends to acquire several of the latter's subsidiaries, namely Momentum Strike Sdn Bhd, Yew Fatt Marketing Sdn Bhd, YFM Distributors Sdn Bhd and HC Hin Marketing Sdn Bhd.
These companies are involved in the sale and distribution of pet food products as well as general sale, wholesale, marketing and distribution of household and consumer products, which Khee San expects to be complementary and synergistic to its existing business.
If negotiations are successful, the purchase will be satisfied via the issuance and allotment of new Khee San shares at an indicative issue price of 33 sen per share.
"Once the share sale turns unconditional, Wah Kong will become a substantial shareholder of Khee San. And depending on the purchase consideration, Wah Kong may then be required to extend a mandatory takeover offer to acquire the remaining shares in Khee San not already held by itself and persons acting in concert, at the indicative offer price of 33 sen per share," said the company in a filing to the bourse.
The HoA will be expiring on Thursday (Oct 31), following the mutual agreement of both parties for the extension of the effective period from Oct 10.
Meanwhile, Khee San, an associate company of London Biscuits Bhd, alleged that Bank of China (M) Bhd had committed breach of conduct on the grounds that the lender took legal action against the candy manufacturer and its wholly-owned subsidiary Khee San Food Industries Sdn Bhd after a default on the loan repayment of RM14.62 million.