This article first appeared in The Edge Malaysia Weekly on December 19, 2022 - December 25, 2022

In early December 2021, aluminium extruder PA Resources Bhd announced that its wholly-owned subsidiary PA Extrusion (M) Sdn Bhd had entered into a sale and purchase agreement to buy a parcel of land measuring 70,000 sq ft in Ijok, Kuala Selangor, for RM12.8 million.

In the announcement, PA Resources said it had paid a deposit of RM1.28 million, or 10% of the acquisition price, and the balance of RM11.52 million would be paid within three months of all the conditions precedent being satisfied with an automatic extension not exceeding one month and subject to late payment interest at the rate of 8% per annum.

The parcel was leasehold land with a tenure expiring in early 2054, and the acquisition did not require shareholders’ approval.

On the rationale for the acquisition, PA Resources said, “After the completion of this purchase of land and building, PA Extrusion is planning to purchase an estimated amount of RM20 million in plant and machinery. This would enable PA Extrusion to increase its production capacity from 2,500 tons a month to an approximate output of 4,000 tons a month. PA Extrusion would then be able to meet the increase in customers’ demand, both local and foreign.”

Following the announcement, there was absolute silence on the acquisition until last week, when the company announced that the S&P agreement had been terminated “due to the non-fulfilment of pre-conditions” by the vendor and all the deposits paid were fully refunded to PA Extrusion.

It is odd that there was no further news or announcements on the land acquisition after the initial announcement on Dec 6, 2021, other than a brief mention in PA Resources’ annual report for FY2022 ended June. After all, this acquisition involved the plan to increase production capacity at PA Extrusion by a substantial 60%.

At this rate, it looks like the company merely parted with RM1.28 million for a year.

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