KUALA LUMPUR: Loss-making Dataprep Holdings Bhd (DHB) has proposed to acquire a 70 per cent stake in DACS Network Solutions Sdn Bhd (DNS) for RM10.5 million, and a private placement to raise cash.
In a filing to Bursa Malaysia Securities Bhd yesterday, DHB said the acquisition will be satisfied via issuance of 82.68 new shares in DHB to Cloudaron Group Bhd at an issuance price of 12.7 sen apiece.
DNS provides and and manages network connectivity services, operating as a telecommunications industry dealer. It also sells information technology hardware.
"The proposed acquisition provides the group with an opportunity to expand its business offerings, whilst simultaneously enabling DHB to derive synergistic benefits through the acquisition of the 70 per cent equity interest in DNS.
"Upon completion of the proposed acquisition, given the similarity in business nature, DHB may leverage on DNS' extensive knowledge in the telecommunication industry and capitalise on DNS' existing customer base. "In addition, leveraging on DNS' industry knowledge and expertise in the telecommunication sector will enable the group to innovate and offer compelling solutions, attracting new clients and fostering client retention, resulting in longer lasting customer relationships and recurring revenue," it noted.
DSN comes with a profit guarantee of RM1.5 million for the financial year ending Dec 31, 2024 (FY24) and another RM1.5 million for FY25.
Separately the company also proposed a private placement of up to 316.27 million new DHB shares, representing 30 per cent of the enlarged total number of issued DHB Shares based on the number of issued DHB Shares of 737.97 million as at Dec 15, 2023.
"After due consideration of the various methods of fund raising, the board is of the opinion that the proposed private placement is the most appropriate avenue of fund raising as it will allow the group to raise funds without incurring additional interest costs or having to service principal repayments as opposed to bank borrowings which may affect the group's bottom line. "In addition, the proposed private placement will allow the Group to raise funds more expeditiously as opposed to other equity fund-raising options such as a rights issue," it said, adding that the exercise will strengthen the company's financial position by increasing its capital base.
Based on the issuance price of 12.7 sen, the proposed private placement is expected to raise RM40.17 million.
DHB reported a net loss of RM14.42 million for the nine-month period ended Sep 30, 2023.