KUALA LUMPUR: Online track and trace solutions provider SMTrack Bhd plans to acquire up to a 100% stake in Wellspring Worldwide Ltd, the owner of the Tutti Frutti Frozen Yogurt brand, for RM310mil.
This will mark a significant change in the business direction of the loss-making Ace Market company, which designs and deploys radio frequency identification (RFID) tags.
In a filing with Bursa Malaysia, SMTrack said the proposed acquisition would be satisfied with a RM20mil cash payment and the issuance of up to 2.07 billion new ordinary shares in SMTrack at an issue price of 14 sen each.
(SMTrack shares closed unchanged at 5.5 sen on Thursday.)
In relation to the proposed acquisition, which it views as a means to improve its financial performance and enhance shareholder value, SMTrack will make a 3-for-2 renounceable rights issue of up to 169.05 million new SMTrack shares, with two free detachable warrants with every three rights shares subscribed.
Of the RM16.9mil gross proceeds, RM15.86mil will go towards paying the RM20mil cash payment.
There will also be a proposed private placement of up to 10% of the total number of issued SMTrack shares after the proposed rights issue and proposed acquisition.
Part of the proceeds from the proposed private placement will also be used for the RN20mil cash payment.
The proposed acquisition will entail a mandatory general offer by the promoters and persons acting in concert (PACs) with them. However, it is the intention of the promoters and the PACs to maintain the company’s listing status.
On completion of the proposed rights issue with warrants and proposed acquisition, Datuk Mohamed Ridzuan Nor Md and Andy Farouk Muhamad Nasim will emerge as the new controlling shareholders of SMTrack holding up to 41.25%% and 42.08%% equity interest (direct and indirect), respectively.
The Wellspring group is mainly involved in the supply and distribution of food and food service products, brand licensing and support services for such products.
It is a master licensor of Tutti Frutti Frozen Yogurt (a self-serve soft frozen yogurt retail store concept) and O’My Buns! (a specialty bakery line producing coffee-glazed and other flavoured buns).
As at Dec 31, 2016, Tutti Frutti Frozen Yogurt brand is present in over 20 countries, having been licensed to over 20 master licensees in the respective countries.
Wellspring’s master licensees and sub-licensees have opened more than 250 Tutti Frutti Frozen Yogurt retail stores in the US and more than 290 stores in other countries.
Meanwhile, O’ My Buns! has seven stores in the US and over 20 stores in six other countries.
Of the private placement proceeds, RM20mil will be used to expand Wellspring group’s business.
Apart from sales and marketing expenses, it will use the allocation to set up a new regional office each in Europe and Middle East to replicate its business operations in the US, as well 12 corporate outlets in seven countries (including two in Malaysia).
The Malaysian promoters are giving a two-year profit guarantee that the Wellspring group’s after-tax profit for the financial years ending Dec 31, 2018 and 2019, will not be lower than US$4.5mil (RM19.2mil) for each year.
Subject to the approvals of the relevant authorities being obtained, SMTrack expects the proposals to be completed in the first half of next year.
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