Bina Puri defends early completion of Sarawak company acquisition amid Bursa query

KUALA LUMPUR (June 6): Bina Puri Holdings Bhd (KL:BPURI) has defended its decision to complete its acquisition of a water treatment contractor prior to the finalisation of legal, financial and operational due diligence, saying contractual safeguards in a supplemental agreement were sufficient.

The group said early completion of the acquisition of Enforture (Sarawak) Sdn Bhd is commercially desirable to enable timely integration of the Sarawak-based firm into the group’s operations.

This allows the group to participate in the management and execution of ongoing projects at an earlier stage, it added in a bourse filing on Friday following a query from Bursa Malaysia Securities on the rationale for completing the acquisition before the due diligence exercises had been fully concluded, and the risks arising from such a move.

“Although due diligence remained ongoing at completion, the supplemental agreement was entered into to safeguard the company’s interests,” said Bina Puri in its response. It added that both legal and financial exercises are substantially complete with regards to the outstanding due diligence.

Bina Puri said the supplemental agreement signed with the vendors provides warranties, indemnities and compensation mechanisms to address any discrepancies or liabilities identified after completion.

The remaining legal work relates to verification of selected supporting documents and completion of independent searches, while outstanding financial due diligence items are described as administrative, and are not expected to have a material impact on the acquisition’s valuation or commercial terms, said Bina Puri.

The group added that no material adverse findings have been identified to date that could terminate the proposed acquisition.

“The board considers the completion of the proposed acquisition, notwithstanding ongoing due diligence, to be fair and reasonable and on normal commercial terms, and in the best interest of the company,” said Bina Puri.

Upon completion of due diligence, Bina Puri said it will re-compute the relevant percentage ratios under Bursa Malaysia’s listing requirements once any assumed liabilities are factored in the consideration value. If the revised ratios meet or exceed the required 25% threshold, the group will proceed to seek shareholders’ approval.

Bina Puri had on May 5 proposed to acquire Enforture Sarawak from Ng Tze Wei and Ng Qing Xiang for an initial cash consideration of RM100,000, together with a deferred profit-linked payment capped at RM15 million or 40% of collected net project profit, whichever is lower.

The announcement noted that Enforture Sarawak was undertaking works with an aggregate value of RM192.8 million across sites in Julau, Song, Kapit, Saratok and Serian, with projected profit before tax of RM52.9 million over the next two years.

Bina Puri, meanwhile, is currently undergoing debt restructuring through a scheme of arrangement with creditors and contending with several winding-up petitions.

Shares of Bina Puri ended flat at 29.5 sen on Friday, valuing the group at RM263.4 million.

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