Mainboard-listed Innopac Holdings, one of the companies linked to John Soh Chee Wen, the alleged mastermind behind the penny stock saga, has entered into a non-binding Memorandum of Understanding (MOU) with FEC Cables for the proposed acquisition of the partial or entire share capital of FEC Power Sdn Bhd on June 8.
The consideration for the proposed acquisition, while yet to be determined, will be satisfied through a combination of cash and the issuance of new ordinary shares in Innopac.
FEC Power is a wholly-owned subsidiary of FEC Cables. It manufactures and supplies cables to the power, telecommunications and automotive industries.
FEC Cables was first established in 1967 as Furukawa Electric Cables, a subsidiary of Furukawa Electric Co. of Japan, which managed and controlled the operations of FEC Cables.
FEC Cables got its name changed in 2003 when it became one of the Permodalan Nasional Berhad (PNB) companies.
In November 2012, Forfen acquired an 81% stake in FEC Cables from PNB. It subsequently increased its stake to 90% in May 2018.
Shares in Innopac were suspended from trading in June 2019 and a notification of delisting was received on June 4, 2019, from the SGX-ST for its failure to meet the financial watch-list criteria.
Since August 2019, Innopac has been helmed by two current independent directors who were appointed in the same month.
The group has been operating without funds, management and staff.
On the proposed acquisition, the board says the move will provide Innopac with a profitable and cash flow generating business that “will ensure its viability and ability to operate as a going-concern”.
Under the MOU, FEC Cables has proposed to provide a profit guarantee to Innopac with FEC Power making around RM20 million ($6.4 million) in profit before tax for three years based on the acquisition of the entire share capital in FEC Power.
The profit guarantee will be adjusted pro-rata in the event of a partial acquisition.
