Thursday 28 Mar 2024
By
main news image

KUALA LUMPUR (Oct 28): Loss-making SMTrack Bhd, formerly Smartag Solutions Bhd, intends to venture into embedded traceability bottling business in the US by acquiring stakes in two firms there.

In a filing with Bursa Malaysia today, SMTrack said it has entered into a joint venture (JV) agreement with Michael Maragh and Marc Thomas to acquire 100% in MRH Capital Inc and 75% in California Bottling Co Inc respectively, via a share swap.

This is in exchange for 40 million new shares or a 14.69% stake in SMTrack's 94.01%-owned subsidiary Smartag International Inc (SII).

SMTrack said the transfer of shares is upon satisfactory completion of its due diligence on the two companies.

Upon completion of the proposed JV, MRH and California Bottling Co will become the subsidiaries of SII.

US-listed SII provides communications services that include GPS-based fleet management, e-commerce and food and secured traceability, while California Bottling Co is solely owned by Thomas, and has a bottling plant in North California that is able to manufacture and distill drinking water as well as spring water.

Under the JV, SMTrack will pay US$50,000 to Maragh and Thomas, and the duo will grant an option to the group to own at least 51% in SII on issuance of the latter’s new shares as well as completion of the share swap deal.

SMTrack also said that each Maragh and Thomas will guarantee a revenue and pre-tax profit of not less than US$200 million and US$13 million respectively.

“Maragh and Thomas both jointly and severally undertake that they will not carry out any additional beverage contracts without giving any first right of acceptance to SMTrack to procure such contracts for the next three years,” SMTrack said.

The duo has also agreed that they will not sell any of their SII shares for any reasons whatsoever until March 31, 2018 and until both the guarantees made are ascertained.

According to SMTrack, the JV is expected to be completed by the fourth quarter of this year, adding that it will be funded internally or through bank borrowings or capital  raising exercises.

On its financial implications, SMTrack said the JV is expected to be favourable to its future earnings and net assets per share.

SMTrack has been in the red since the financial year ended Sept 30, 2012 (FY12).

For the third financial quarter ended June 30, 2014 (3QFY14), the group saw its net loss widened to RM2.1 million from RM1.96 million a year ago, on higher selling and distribution expenses resulting from higher travelling and marketing expenses incurred.

Revenue, however, rose marginally by 1% to RM176,000 from RM174,000.
 
SMTrack shares closed 5% higher to 10.5 sen today, giving it a market capitalisation of RM28.60 million.
 

      Print
      Text Size
      Share