Leong Hup subsidiary sells 40m Teo Seng shares to Felda co-op

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KUALA LUMPUR: Leong Hup Holdings Bhd's (LHH) subsidiary is disposing of 40 million shares in soon-to-be listed Teo Seng Capital Bhd to Koperasi Permodalan Felda Bhd (KFFB) for RM18.6 million to meet the Bumiputera investors ruling.

Leong Hup said on Sept 11 the 40 milion shares represented 20% of the share capital of Teo Seng were disposed of by its 51.16%-owned Advantage Valuations Sdn Bhd (AVSB).

It added AVSB had also entered into three-year put option with KPFB whereby AVSB grants an irrevocable option to KPFB to dispose of the sale shares for an option fee of RM1.

To recap, the Securities Commission had on March 31, 2008 approved Teo Seng's listing scheme which included the offer for sale by AVSB of 42 million Teo Seng shares or 21% of the enlarged share capital at an offer price to be determined later to Bumiputera investors to be approved by Ministry of International Trade and Industry (MITI).

On June 10, 2008, LHH shareholders approved the listing. However, MITI was unable to identify any interested Bumiputera investors for the remaining 37 million Teo Seng Shares. AVSB temporarily placed 37,000,000 Teo Seng Shares in a trust account, whereby the shares must be placed to Bumiputera investors approved by Oct 29, 2009.

LHH said on Sept 11 the salient terms of the share sale agreement the chairman and managing director listed in Teo Seng’s prospectus dated Sept 26, 2008 shall continue to manage Teo Seng for no less than three years from the completion of the SSA.

"Teo Seng shall achieve a profit after tax in respect of its financial year ending (FYE) March 31, 2011 no less than the historical profit after tax of RM12.6 million only that was achieved in respect of Teo Seng’s FYE 31 March 2009;

"Teo Seng’s dividend payout shall not be lower than that stated in the Prospectus as the dividend policy of Teo Seng for at least two succeeding financial years of 20% to 50%;

"AVSB shall hold no less than 51.12% of the issued and paid-up capital in Teo Seng for at least three years from the completion of the SSA," it added.