KUALA LUMPUR (Nov 10): Metronic Global Bhd said today it expects to realise a loss of RM2.42 million on the disposal of 70 million shares in ACE Market-listed NETX Holdings Bhd.

According to a filing with Bursa Malaysia, the shares were disposed of during the period from April 5 to Nov 7, amounting to RM2.08 million in value. This represented 3.63% of Metronic’s audited net assets as of Dec 31, 2015.

“The intended application of the net proceeds arising from the disposal is solely for working capital and the time frame for full utilisation of proceeds is within 12 months,” it said.

Recall that Metronic recently reversed its decision to seek an extraordinary general meeting (EGM) to remove five directors on the board of loss-making MNC Wireless Bhd — Wong Kok Seong, Christopher Tan Chor How, Pang Siaw Sian, Thu Soon Sien and Kua Khai Shyuan.

It said in its filing that the decision was to allow the board to carry out its business expansion plans pursuant to a rights issue, which will be listed tomorrow.

It is worth noting that Metronic had filed an ex-parte injunction application dated Oct 7, 2016 against the five directors, Datuk Seri Dr Jacky Pang Chow Huat and MNC for an injunction to restrain them from taking any steps to implement the proposed rights issue.

The exercise also included an employee share option scheme, increase in the authorised share capital of MNC and amendments to the memorandum of association. The order also sought to restrain Pang Chow Huat from subscribing to the rights issue and employee share option scheme. The application was dismissed by the High Court on Oct 12.

While it is uncertain what triggered the change of decision in Metronic, the rights issue would mean that Metronic, being the largest shareholder in MNC, will have to inject more capital into MNC or risk dilution of its 18.75% stake in MNC.

The latest disposal of NETX is aimed at improving Metronic’s cash flow requirements. Based on its latest audited financial statements for the
financial year ended June 30, 2016, NETX posted a net loss of RM8.3 million.

On Nov 3, 2016, Metronic saw a total of 76.59 million shares or a 10.1% stake worth RM11.49 million or 15 sen per share traded off market, representing a premium of 100% of its share price of 7.5 sen at that time.

Metronic is currently trading at a trailing P/E of 7.34 times and has gained 6.7% year-to-date and 23.1% compared with a year ago. The stock closed unchanged at 8 sen today, for a market capitalisation of RM60.7 million.